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By electronic submission
Docket ID: USTR-2018-0037
Chair of the Special 301 Committee
Office of the United States Trade Representative
Washington, D.C.
BIOTECHNOLOGY INNOVATION ORGANIZATION
2019 SPECIAL 301 SUBMISSION
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Table of Contents
PRIORITY FOREIGN COUNTRY .......................................................................................... 10
Malaysia .................................................................................................................................... 10
PRIORITY WATCH LIST ........................................................................................................ 13
Algeria........................................................................................................................................ 13
Argentina ................................................................................................................................... 14
Brazil .......................................................................................................................................... 16
Canada ....................................................................................................................................... 19
Chile ........................................................................................................................................... 21
China .......................................................................................................................................... 23
Colombia ................................................................................................................................... 28
India ........................................................................................................................................... 30
Indonesia ................................................................................................................................... 34
Japan.......................................................................................................................................... 36
Russia ......................................................................................................................................... 39
Saudi Arabia .............................................................................................................................. 41
South Korea ............................................................................................................................... 42
Thailand ..................................................................................................................................... 44
Turkey ........................................................................................................................................ 46
WATCH LIST ............................................................................................................................. 48
Australia .................................................................................................................................... 48
Egypt .......................................................................................................................................... 50
European Union ........................................................................................................................ 51
Mexico ....................................................................................................................................... 53
United Arab Emirates ................................................................................................................ 55
United Kingdom......................................................................................................................... 55
CONCLUSION ........................................................................................................................... 56
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I. OVERVIEW OF BIOSCIENCE INNOVATION INDUSTRIES
The Biotechnology Innovation Organization (BIO) appreciates the opportunity to participate in
the 2019 Special 301 Review: Identification of Countries under Section 182 of the Trade Act of
1974: Request for Public Comment and Announcement of Public Hearing. We hope our
contribution will assist the United States Trade Representative’s (USTR) efforts in preserving
strong intellectual property protections for United States’ companies internationally.
BIO is a non-profit organization with a membership of more than 1,000 biotechnology
companies, academic institutions, state biotechnology centers, and related organizations in
almost all 50 States and a number of foreign countries. BIO’s members research and develop
health care, agricultural, industrial, and environmental biotechnology products. The U.S. life
sciences industry, fueled by the strength of the U.S. intellectual property (IP) system, has
generated hundreds of drug products, medical diagnostic tests, genetically engineered crops, and
environmentally beneficial products such as renewable fuels and bio-based plastics.
The vast majority of BIO’s members are small and medium sized enterprises that currently do
not have products on the market. As such, BIO’s members rely heavily on the strength and scope
of their IP to generate investments needed to commercialize their technologies. More and more,
BIO’s members are looking abroad as they expand their R&D and commercialization efforts and
the challenging IP policies highlighted below frustrate this growth.
A. BIOSIENCE INNOVATION IMPROVES THE ECONOMY
Advances in biotechnology innovation have had a transformative impact on many sectors of the
economy — from advances in healthcare to improved plants that are key to feeding the world to
industrial biotechnology applications that are leading to bio-based fuels, chemicals and products
that can protect our environment and herald a new age of sustainable development.
Bioscience industries employed 1.74 million people in 2016 across more than 85,000 U.S.
business establishments. The broader employment impact of U.S. bioscience jobs is an
additional 8 million jobs throughout therest of the economy. Taken together, these direct,
indirect, and induced bioscience jobs account for a total employment impact of 9.7 million jobs.1
The industry continues to pay high wages, reflecting the high skills and education requirements
of an innovative workforce, with the average U.S. bioscience worker earning nearly $99,000 per
year, or 85% greater than the private sector average. Since 2001, bioscience wages have grown
substantially faster than overall private sector wages.2 The bioscience industry is also well
distributed geographically in the United States: 38 states and Puerto Rico have an employment
specialization in at least one bioscience subsector. For U.S. metropolitan areas, 213 of 383 have
employment in at least one biotechnology sector.3
1 “Investment, Innovation and Job Creation in a Growing U.S. Bioscience Industry 2018”
https://www.bio.org/sites/default/files/TEConomy_BIO_2018_Report.pdf at 1-2. 2 Id. 3 Id.3
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B. BIOSCIENCE INNOVATION IMPROVES HEALTH OUTCOMES
In addition to contributing to economic prosperity, bioscience industries are delivering improved
health outcomes and giving individuals who suffer from medical conditions the hope of living a
fuller, healthier life. Innovations made by the bioscience industry are transforming the way we
treat patients. Today, many diagnoses that were once devastating can now be cured or treated as
a manageable chronic condition. For instance: Hepatitis C, which was once an incurable disease,
now has cure rates above 90%; the death rate for cancer has fallen by 22% since its peak in 1991,
due in large part to medicines; and HIV/AIDS death rates have decreased 85% since 1995.4
C. BIOSCIENCE INNOVATION IMPROVES AGRIGULTURE AND OTHER
INDUSTRIES
In addition to health outcome improvements, significant and meaningful advances have been
made in agriculture, food and industrial biotechnology.
In agriculture, genetically engineered crops have been on the market for twenty years. During
this time, advances in bioscience have enabled farmers to more effectively manage harmful pests
and disease thereby increasing crop yields, reducing environmental impacts making agricultural
production more sustainable. In addition to addressing agronomic challenges, advances in
biosciences now enable farmers to grow higher valued consumer oriented crops, such as non-
browning apples and potatoes that reduce food waste and soybeans with a more heart healthy oil
composition.
Furthermore, innovations in industrial biotechnology illustrate a shift towards bio-based products
is underway that is critical for environmentally sustainable development. These bio-based
products are biodegradable and non-polluting and can also be applied to use in environmental
remediation to clean up the legacy of our non-sustainable industrial past.5
II. INTELLECTUAL PROPERTY ENABLES DEVELOPMENT OF BIOTECHNOLOGY
INNOVATION
Biotechnology business models (for agriculture, pharmaceutical and industrial applications) are
built on collaborations between universities, small biotechnology companies, venture capital and
larger private company partners. Governments support this model, and benefit from
development of biotechnology innovations into products when they establish enabling
environments for innovation. Experts have identified seven components of an enabling
innovation environment for biotechnology: human capital, infrastructure for R&D, intellectual
property protection, regulatory environment, technology transfer, market and commercial
incentives, and legal certainty.6
4 “Innovation Saves” https://www.bio.org/toolkit/infographics/innovation-saves 5 “Growing America’s Biobased Economy” https://www.bio.org/toolkit/issue-briefs/growing-
america%E2%80%99s-biobased-economy 6 Building the Bioeconomy 2018. http://www.pugatch-consilium.com/reports/Building_the_Bioeconomy2018.pdf
See page 12
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The agricultural and pharmaceutical biotechnology industries rely heavily on patents and
regulatory data protection for legal certainty needed to attract investments. The development of
a single biotechnology product in both of these sectors often takes scientists more than a decade
to commercialize, and hundreds of millions (and in the healthcare sector more than a billion) of
dollars of capital investment, a significant amount of which comes from private sources.
Biotechnology product development is also fraught with high risk – the vast majority of biotech
medicines and therapies fail to ever reach the marketplace. In addition, while biotech health
inventions are entitled to the same patent term as all other inventions − 20 years from the time
they are filed – they face the additional hurdle of a rigorous pre-launch regulatory review process
during which they may lose between 8 to 10 years of the patent life. In agricultural
biotechnology, following regulatory approvals in cultivating countries such as the United States,
the path to market is often delayed due to asynchronous approvals in markets that import U.S.
grain, such as Europe and China, thus eroding patent life.
Venture capital firms invest in capital-intensive, long-term, and high-risk research and
development endeavors only if they believe that there will be an attractive return on their
investment. Patents and regulatory data protection help provide this assurance. According to a
patent survey conducted by researchers at the University of California Berkeley, 73% of the
biotechnology entrepreneurs reported that potential funders, such as venture capitalists, angel
investors, and commercial banks, indicated patents were an important factor in their investment
decisions.7
Without strong and predictable patent protection, investors will shy away from investing in
biotech innovation, and will simply put their money into projects or products that are less risky –
without regard to the great value that biotechnology offers society.
While the IP environment in the United States has contributed to the emergence of many
biotechnology businesses and provided their first market opportunities, these businesses need to
participate in the global economy in their search for innovations and rewards for transforming
those innovations into products. IP reforms outside the United States could improve conditions
for export of biotech from the United States. In addition, improvements in IP would benefit
those countries and support their ambitions to develop innovative ecosystems. An OECD study
by Cavazos et al, for instance, looked at R&D expenditure and technology transfer as well as
FDI and found that a 1% change in the strength of a national IP environment (based on a
statistical index) is associated with a 2.8% increase in FDI in-flows, a 2% increase in service
imports and a 0.7% increase in domestic R&D.8 Studies show that even developing countries
obtain economic benefits from increasing their IP protection.9 Like in other trade areas,
7 Graham, Stuart J. H. and Sichelman, Ted M., Why Do Start-Ups Patent? (September 6, 2008). Berkeley
Technology Law Journal, Vol. 23, 2008. Available at SSRN: http://ssrn.com/abstract=1121224 8 “Building the Bioeconomy”, Supra, 19-20. 9 See Cavazos, Ricardo H. & C. Lippoldt, Douglas & Senft, Jonathan, 2010. Policy Complements to the
Strengthening of IPRS in Developing Countries; Minyuan Zhao, 2010. "Policy Complements to the Strengthening of
IPRS in Developing Countries - China's Intellectual Property Environment: A Firm-Level Perspective," OECD
Trade Policy Papers 105, OECD Publishing; ; Lee Branstetter & Kamal Saggi, 2009. "Intellectual Property
Rights, Foreign Direct Investment and Industrial Development," Economic Journal, Royal Economic Society,
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increased standards in IP provide a win-win situation for the United States and other nations
around the world.
For well over a century, governments have recognized the need for global minimum standards
that enable inventors to effectively and efficiently protect and share their inventions in a
territorial system of intellectual property rights. The Paris Convention for the Protection of
Industrial Property (signed in 1883) allowed inventors, regardless of nationality, to claim priority
for their inventions and to take advantage of the intellectual property laws in each member
country. Today, most countries are members of the Paris Convention and the Patent Cooperation
Treaty (PCT) that facilitates filing patent applications globally.
The World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS), which entered into force in 1994, was a major achievement in
strengthening the worldwide protection and enforcement of intellectual property rights by
creating an international minimum standard of protection for intellectual property rights. Because
it concerns both the definition and enforcement of rights, TRIPS is one of the single most
important steps toward effective protection of intellectual property globally.
Through WTO accessions and regional and bilateral trade agreements, the United States and
other countries have given effect to and built on the global minimum standards of protection
international rules provide. U.S. trade agreements can help to drive and sustain biotechnology
innovation by eliminating restrictive patentability criteria, addressing unreasonable patent
examination and marketing approval delays, promoting the early and effective resolution of
patent disputes and protecting regulatory test data. They have established rules and principles
that, if implemented effectively, promote fair, transparent, reasonable and non-discriminatory
market access for life science technologies.
Despite these achievements, certain U.S. trading partners maintain or are considering acts,
policies or practices that are harming or would harm the ability of biotechnology innovators to
research, develop and deliver new treatments and cures for patients and advances in agricultural
and industrial biotechnology applications around the world. Some of these efforts are aimed at
forcing localization of technology. While often popular they are harmful not only to the
biotechnology industry but to the long-term prospects for the country’s economic growth in this
sector.10 These acts, policies or practices deny or would deny adequate and effective intellectual
property protection and/or fair and equitable market access for innovative biotechnology
products. In many cases, they appear to be inconsistent with global, regional and bilateral rules.
To help assess the IP challenges abroad that may hinder biotechnology developments, BIO has
surveyed our members asking them to identify relevant IPR barriers in the identified nation’s
law, courts, enforcement regime, regulatory regime, import/export regime, etc. Our members
have provided the information found in this submission and we have compiled the information in
aggregate form.
vol. 121(555), pages 1161-1191; Branstetter, Lee & Fisman, Raymond & Fritz Foley, C & Saggi, Kamal, 2007.
Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence. 10.3386/w13033. 10 Pugatch, Localization Barriers, http://www.pugatch-consilium.com/reports/Localization%20Paper_us_final.pdf
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III. Practices that Undermine Innovation
In recent years the biotechnology industry has faced a growing number of work streams within
the multilateral system that threaten to undermine future investments and innovation in
biotechnology - most significant, the repeated and narrow focus on IP as a barrier to access to
medicines. While IP and pricing related to new drugs and biologics have long been a source of
debate, multilateral institutions are increasingly providing fora to pursue biased work streams
that cast innovators and the systems that incentivize innovation as cause of problems surrounding
access to medicines. These work streams simply serve to polarize the issue rather than advance
meaningful solutions, because they are not evidence-based and fail to examine the myriad of
fundamental challenges that are in fact the cause of limited access – such as poorly functioning
healthcare regulatory systems, supply chains and delivery infrastructure and systems.
Biotechnology innovators support strong national health systems and timely access to quality,
safe and effective medicines for patients who need them. Patents and regulatory data protection
drive and enable the research and development that delivers new treatments and cures. These
limited and temporary intellectual property rights are not barriers to access to medicines; to the
contrary, they promote access to medicines, particularly when governments and the private
sector partner to improve health outcomes.
BIO describes below some of these flawed approaches that should be prioritized by the U.S.
government in its trade-related negotiations with foreign countries and in its dealings with
multilateral organizations.
A. Compulsory Licenses
Under the guise of “TRIPS” flexibilities, non-government organizations and some international
organizations are actively encouraging governments to avoid granting IP rights, force
biotechnology companies to transfer technology to local companies, or regularly resort to
compulsory licenses (CLs) for biopharmaceutical products.
Some governments have issued or threatened to issue CLs that allow local companies to make,
use, sell or import particular patented medicines without the consent of the patent holder. In the
case of medicines, BIO strongly believes governments should grant CLs only in accordance with
international rules and as a last resort in exceptional circumstances. Decisions should be made on
public health emergency grounds through fair and transparent processes that involve
participation by all stakeholders and consider all the facts and options, including less harmful but
effective alternatives to CLs.
B. Price Controls
As mentioned earlier, bringing a new biopharmaceutical product through the lengthy research
and development phase to commercialization stage is increasingly costly and risky. Strong
intellectual property protection is critical, but so is value-based pricing and reimbursement. In
many foreign countries, where the government is responsible for health care costs, industry is
under attack to lower prices. Biopharmaceuticals are saving lives and curing once incurable
diseases. As independent data consistently shows, these new treatments not only save lives, but
also can lower overall health care costs. Unfortunately, longer-term savings and population
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health and productivity gains are often overlooked for short-term budgetary gains, and the value
of biopharmaceutical innovations and their IP are being unreasonably restricted by countries. In
particular, BIO is concerned about such practices by developed economies such as Canada,
Japan and Korea.
These developed countries, with strong economies and capacities of their own and high standards
of living, should be in the forefront of nations acting responsibly to support innovators working
to improve health outcomes globally. We provide below brief summaries of negative market-
access policies in these countries that have been identified by BIO members. Additional detail
can be found in the specific country sections in this submission.
BIO encourages the United States to place Canada, Japan and Korea on the Priority Watch List
to prioritize addressing these practices in the context of ongoing trade negotiations.
Canada
In 2017, Canada proposed regulatory changes to the Patented Medicine Prices Review Board
(PMPRB) with a stated goal of ensuring “non-excessive” prices. Key proposals would amend
the basket of reference countries used to calculate reimbursement prices by deleting the United
States and Switzerland. They also would introduce various new factors to determine whether a
price is “excessive,” and require manufacturers to report all indirect price reductions. These
proposed changes could have a serious negative impact on the value of innovative products and
their associated intellectual property rights developed and introduced by U.S. biopharmaceutical
companies operating in Canada.
Japan
In December 2017, the Japanese government approved a drug pricing reform package that
contains a number of new pricing efforts that significantly undermine Japan’s pro-innovation
environment and its efforts to carry its fair share of the costs of global R&D efforts. The
eligibility criteria for the new Price Maintenance Premium (PMP) program means that some of
American’s most innovative pharmaceutical products will now be significantly undervalued.
Specific elements of the PMP also call into question Japan’s commitment to non-discriminatory
policies, including “national treatment” principles. In addition, the lack of procedural
transparency and meaningful input by industry into the new cost-effectiveness-based Health
Technology Assessment (HTA) system, which is expected to be finalized in 2019, could further
disincentivize innovation in Japan.
Korea
Korea restricts the prices of innovative medicines by valuing them according to the prices of
older medicines or prices in poorer countries. In addition, Korea’s pricing policies overtly favor
its domestic pharmaceutical industry. Through these valuation techniques, Korea seeks to benefit
from research and development generated to a large degree in the United States without paying
its fair share. This approach harms not just the U.S. industry, but also patients around the world
by reducing the revenues available to further expand R&D efforts. It is also inconsistent with
Korea’s commitments under KORUS, including the updated U.S.-Korea Free Trade Agreement
Outcomes, to value U.S. innovation appropriately to ensure that patent owners can secure
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reasonable economic rewards free from price distortions.
C. Other Common Concerns
The intellectual property challenges described below have practical and immediate impact on the
ability of BIO members to invest in discovering and transforming promising molecules and
proteins into useful new applications to help heal, feed and fuel the world. These challenges
hinder or prevent innovators from securing patents (patent backlogs and restrictive patentability
criteria), maintaining and effectively enforcing patents (lack of mechanisms to promote efficient
resolution of patent disputes, weak patent enforcement and due process) and protecting
regulatory test data (regulatory data protection failures).
Patent Backlogs
Long patent examination and approval backlogs harm domestic and overseas inventors in every
economic sector. Backlogs undermine incentives to innovate across sectors and prevent timely
patient access to valuable new treatments and cures while also contributing to delay in
introduction of new agricultural innovations. Because the term of a patent begins on the date an
application is filed, unreasonable delays can directly reduce the value of granted patents and
undermine investment in future research. For biopharmaceutical companies, patent backlogs can
postpone the introduction of new medicines. They create legal uncertainty, for research-based
and generic companies alike, and can increase the time and cost associated with bringing a new
treatment to market. Brazil, India and Thailand are countries with persistent backlog problems.
Restrictive Patentability Criteria
To transform valuable new innovations into products that people can use, innovators must be
able to secure patents on all inventions that meet the basic TRIPS requirements of being new,
involve an inventive step and are capable of industrial application. National laws, regulations or
judicial decisions that prohibit patents on certain types of inventions or impose additional or
heightened patentability criteria prevent innovators from building on prior knowledge to develop
valuable new and improved technologies. Some of the most serious examples of restrictive
patentability criteria challenges facing BIO members in countries around the world include:
Argentina, Brazil, Canada, Chile, China, Egypt, India, Indonesia, Thailand, Turkey.
Early Resolution Mechanism for Patent Disputes
A mechanism that allows for effective early resolution of disputes concerning patents of
innovative drugs benefits both the innovator and follow-on manufacturers by creating clear rules
for resolving costly patent disputes in an efficient manner. It also contributes to improving
patent enforcement by ensuring the regulatory agency of a jurisdiction do not inadvertently
contribute to the infringement of patent rights. China, for example, despite proposing to put in
place a patent linkage mechanism, has made little to no progress in ensuring implementation.
BIO is also continuing to monitor ongoing efforts to implement a robust and comprehensive
patent linkage system in Taiwan and other countries.
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Regulatory Data Protection Failures
Regulatory data protection (RDP) complements patents on innovative medicines and agriculture
protection products. By providing temporary protection for the comprehensive package of
information biopharmaceutical innovators must submit to regulatory authorities to demonstrate
the safety and efficacy of a medicine or of crop protection products, for marketing approval,
RDP provides critical incentives for investment in new treatments and cures.
RDP is particularly critical for biologic medicines, which may not be adequately protected by
patents alone. Derived from living organisms, biologics are so complex that it is possible for
others to produce a version – or “biosimilar” – of a medicine that may not be covered within the
scope of the innovator’s patent. For this reason and others, Congress included provisions in the
Affordable Care Act providing twelve years of RDP for biologics. This was not an arbitrary
number, but rather the result of careful consideration and considerable research on the incentives
necessary to ensure biopharmaceutical innovators and the associated global scientific eco-system
are able to sustainably pursue groundbreaking biomedical research.
Unfortunately, many U.S. trading partners do not provide adequate, if any, RDP. This is clearly
contrary to WTO rules, which require parties to protect regulatory test data against both
disclosure and unfair commercial use. Examples described further in the country profiles below
include: Argentina, Brazil, China, India, Indonesia, Malaysia, Russia, Thailand, and Turkey.
BIO members urge USTR and other federal agencies to highlight these countries and challenges
in the 2019 Special 301 Report and to use all available tools to address and resolve them.
PRIORITY FOREIGN COUNTRY
Malaysia
BIO and its member companies are alarmed by actions of the Malaysian government which
constitute a blatant disregard of patent rights protection and recommend USTR treat Malaysia as
a Priority Foreign Country.
In September 2017, the Government of Malaysia exercised its rights under Section 84 of its
Patent Act of 1983 and announced it would move forward with a “government-use license” –
effectively a compulsory license - on a patented therapeutic product, despite the patent owner’s
agreement to address related public health concerns through voluntary licenses. The government-
use license would nullify patent rights in favor of providing marketing opportunities to local
pharmaceutical companies. In addition, the government and local advocates have expressed
interest in expanding the compulsory licensing scheme to include additional patented therapies.
The use of compulsory licensing in Malaysia has far reaching ramifications for the
biopharmaceutical industry as other governments, such as Chile and Colombia are considering
similar policies that would provide broad discretion to issue compulsory license. In 2018, USTR
named Malaysia for Out-of-Cycle Review to evaluate the extent to which Malaysia is providing
adequate and effective IP protection and enforcement, including with respect to patents.
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In addition to expropriation of patent rights, BIO is also concerned about the lack of effective
regulatory data protection in Malaysia. Not only is the scheme narrow in scope, it also places
onerous requirements on biopharmaceutical originators seeking protection for their data against
unfair commercial use and disclosure. As a result, some companies have had their applications
rejected on arbitrary grounds, and some face an unreasonably curtailed protection period.
The intellectual property challenges faced by BIO member companies in Malaysia are egregious.
The compulsory licensing scheme, coupled with lack of meaningful regulatory data protection,
will adversely affect the incentives for companies to develop and to introduce new therapies in
Malaysia, and the spread of these practices will weaken U.S. companies’ ability to compete
globally, and, ultimately, put American jobs at risk.
Compulsory Licensing
In September 2017, Malaysia’s Ministry of Health, under the Administration of former Prime
Minister Najib Razak, announced that the Cabinet approved a government-use compulsory
license on a patented breakthrough therapy developed by a U.S. biopharmaceutical company.
The compulsory license would permit local firms in Malaysia to import and manufacture generic
versions of the patented product for sale at public hospitals without the consent of the patent
owner. Prior to the announcement by the Malaysian Ministry of Health, the patented treatment,
which is a medical breakthrough for hepatitis C virus (HCV) patients, had been approved by
Malaysia’s own regulators and available to patients in Malaysia for two years, since September
2015. In addition, the patent owner had committed to include Malaysia in its voluntary licensing
program, which would address the Malaysian Government’s procurement needs while providing
patients with affordable quality-assured products in a timely manner. Instead, the Government
of Malaysia moved forward with compulsory licensing, and its sudden announcement provided
little opportunity for the patent owner to give timely feedback, nor for the input to be
meaningfully considered.
Malaysia’s compulsory licensing scheme lacks sufficient transparency, due process, and
dialogue, as the patent owner was given inadequate notice and limited opportunities to respond
to the government’s decision. Furthermore, the Ministry of Health continues to entertain
recommendations by advocacy groups to impose compulsory licenses on additional therapeutic
areas, which would allow local companies to import, manufacture, sell, and distribute generic
versions of patented products. Using compulsory licensing to promote the importation of or local
production of medicines, at the expense of innovators and manufacturers in the United States and
elsewhere, appears to be a key industrial policy strategy for the Malaysian government, which
has identified biotechnology as one of its strategic growth sectors.
Despite being named for Out-of-Cycle Review by USTR in 2018, and despite renewed efforts by
the U.S. innovator to engage in in-depth negotiation with the new Administration under Prime
Minister Mahathir Mohamad to address Malaysia Government’s procurement needs under its
voluntary licensing program, the Ministry of Health nevertheless moved forward to enable third-
party manufacturers, which have not demonstrated compliance with Good Manufacturing
Practices, to manufacture and import the patented products for use in 22 public hospitals. It is
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also disappointing that the Malaysian Government has taken no meaningful steps to improve
transparency and the lack of procedural fairness in pricing and procurement negotiations.
Malaysia’s baseless decision to expropriate patent rights of a U.S. manufacturer through a
process that lacked transparency, and in the absence of any justified access problem, is deeply
troubling to BIO and our members.
Compulsory licenses should be granted in accordance with international agreements and only in
exceptional circumstances. Furthermore, compulsory licensing decisions should be made through
a fair and transparent process that involves participation by all stakeholders. Priority should be
given to a partnership or mutually accepted resolution with the patent holder. BIO feels strongly
that compulsory licensing is not an effective nor sustainable way to address a country’s
healthcare needs, nor is it an indication of a strong national healthcare system, one that ensures
patient access to safe and quality medicines while supporting continued development of
innovative treatments. BIO urges the Government of Malaysia to uphold its commitments to
protect the intellectual property rights of foreign patent holders and to ensure that current, as well
as future, patients have access to innovative medicines.
BIO is further concerned that Malaysia’s denial of proper IP protection for patent holders may
set a destructive precedent that will erode the spirit of the TRIPS Agreement and ultimately
dilute the global intellectual property regime. Other government authorities are aware of the
actions taken by the Malaysian government, and are closely monitoring stakeholder reactions,
including that of the U.S. government. Malaysia’s compulsory licensing decision and the
potential expansion of expropriations through licensing within, as well as beyond, Malaysia’s
borders will harm American companies and place American jobs at risk. BIO therefore requests
intervention by the Office of the USTR and the U.S. interagency to defend the IP rights of and to
preserve fair and equitable market access by U.S. biopharmaceutical innovators.
Regulatory Data Protection
Malaysia’s policy on data exclusivity severely limits the protection afforded to
biopharmaceutical originator’s proprietary data submitted to the Ministry of Health. In particular,
BIO is concerned that Malaysia’s data exclusivity guidelines effectively exclude data protection
for biological products. Under Malaysia’s regulatory data protection regime, the Ministry of
Health restricts eligibility of originators to receive data protection by requiring originators to
submit the new drug application within eighteen months from the date the product is first
registered or granted marketing authorization globally. For new indications, the time limit to
apply is only twelve months. Such an arbitrary time limit for seeking marketing approval in order
to qualify for data protection unfairly discriminates against smaller and medium-sized biotech
firms that may not have the resources or the expertise in global marketing of products.
Furthermore, companies may have a valid reason to postpone launch in the Malaysian market,
such as additional testing for safety concerns due to adverse events in another market.
Malaysia’s policy on data exclusivity unreasonably curtails the protection period of regulatory
data by starting the clock of the protection period from the date the product is first registered or
approved and granted data exclusivity in the country of origin. Thus, the only instance in which
an innovator can receive the full five years of RDP in Malaysia is if they seek marketing
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approval in Malaysia first. Furthermore, BIO is concerned with the lack of transparency, due
process, and stakeholder consultation in the Ministry of Health’s decision to deny regulatory data
protection to originators.
BIO member companies invest a significant amount of resources to develop research data to
prove the safety, efficacy, and quality of originator products. The lack of adequate regulatory
data protection scheme in Malaysia undermines the competitiveness of biomedical innovators in
the United States and elsewhere by allowing other firms to rely on originator-generated data to
obtain market approval.
PRIORITY WATCH LIST
Algeria
Despite positive collaboration with the Algerian government until 2012 and public statements
from subsequent Ministers affirming their commitment to boosting the country’s competitiveness
in the innovative biopharmaceutical sector, BIO members continue to face significant intellectual
property and market access challenges in Algeria. Nonetheless, BIO continues to work directly
with the Algerian government to advise them on the necessary enabling factors to grow their
local innovative sector and resolve critical issues facing global biotechnology companies.
Due to issues surrounding weak patent enforcement and regulatory data protection failures, as
well as market access barriers such as import restrictions and forced localization, BIO
recommends the continued placement of Algeria on the Priority Watch List.
Weak Patent Enforcement and Regulatory Data Protection
Algerian regulatory authorities, despite the existence of laws and regulations to the contrary,
continue to grant marketing approval to copies of patent protected products while the original
patent is still in effect. In some cases, this occurs many years in advance of the original product
patent expiration despite the owners repeated attempts to alert the authorities and present
documentation confirming that the product is under patent in Algeria. This issue is compounded
by the absence of effective judicial remedies for preventing the infringement of basic patent
rights, including the lack of injunctive relief.
Furthermore, Algeria fails to protect pharmaceutical test and other data from unfair commercial
use and disclosure.
Market Access Barriers
Since 2009, Algeria has prevented the importation of many products that compete with similar
products that are being manufactured locally. Further measures taken in 2015 to restrict the
importation of products not manufactured locally contradict the government’s aspirations to
attract more investment by the innovative biopharmaceutical industry, and for Algeria to accede
to the WTO. BIO continues to be concerned by the Ministry of Health’s procedures to promote
forced local manufacturing. Such actions have a negative impact on patients and unfairly
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discriminate against BIO members. Repealing such policies should be a prerequisite for
Algeria’s ascension to the WTO.
Argentina
Argentina has expressed interests in encouraging the development of an innovative bio-economy
and BIO welcomes the opportunity to partner with the Government of Argentina. However, BIO
members continue to face a challenging IP environment in Argentina. Most concerning are
persistent patent backlogs, lack of patent term extension, narrow patentability requirements and
lack of regulatory data protection. Accordingly, BIO recommends Argentina remain on the
Priority Watch List.
BIO requests that USTR utilizes all bilateral and multilateral opportunities with the Argentine
government to raise concerns and address the critical intellectual property issues described in this
document, including through the negotiations of the Trade and Investment Framework
Agreement (TIFA), the Patent Cooperation Treaty (PCT), and other bilateral means to address
these challenges.
Restrictive Patentability Criteria and Patent Prosecution Practices
Argentina has one of the most restrictive IP regimes for obtaining biopharmaceutical and
agribiotechnology patents in the world. Argentine Patent Examination Guidelines Disposition
No. 73/2013; Joint Resolutions No. 118, 546, 107 of 2012 for biopharmaceutical inventions; and
Resolution No. 283/2015 for biotechnology inventions applied to plants or animals introduced
higher standards for the examination of patent applications and restrict as patent eligible subject
matter innovations that are essential for the biotech sector. For example, pharmaceutical patents
are not available for compositions, dosages, salts, esters and ethers, polymorphs, analogous
processes, active metabolites and pro-drugs, enantiomers and selection patents. In addition, the
ability to describe and claim an invention using Markush-type claims is severely limited. As
such, the restrictive guidelines refuse pharmaceutical patents for almost 80% of all
pharmaceutical applications.
Furthermore, Resolution No. 283/2015 imposes additional patentability criteria beyond those of
demonstrating novelty, inventive step and industrial application for biotechnology inventions
applied to plants and animals. BIO encourages Argentina to respect the implementation of the
international standards for novelty, inventive step and industrial applicability and abrogate the
internal regulations that establish new criteria that is not supported neither in the Patent Law and
its Regulating Decree.
These existing internal regulations that Argentina has in practice deters the introduction of more
biotech innovations into Argentina and could disincentivizes local innovation in these areas.
Argentina is one o the few remaining trading partners with the US that has still not become a
member of the Patent Cooperation Treaty (PCT). Argentina could benefit from this international
treaty which facilitates the ability, for example, of local inventors access to the filing and
examination of inventions in more than a hundred countries in the world. Implementing this
widely accepted agreement would be a positive step toward reducing unnecessary expenses and
15
facilitating the procurement of patent applications not only for BIO’s members but also for local
inventors.
Regulatory Data Protection
Argentina does not provide adequate protection for data submitted in support of marketing
authorizations to establish that either agricultural, chemical, pharmaceutical products and/or
biotechnology products are safe and effective. Specifically, Law 24,766 permits Argentine
Regulatory Authorities to rely on innovator’s data to approve other similar or identical products
as soon as the innovator product is itself approved. The companies which introduce other similar
or identical products in Argentina may also rely on marketing approval of an innovative product
in other countries to support their Argentine filing. The protection of proprietary regulatory data
is critical to the ability of pharmaceutical, chemical and biotechnology companies to develop and
commercialize pharmaceutical, agrochemical and biotechnology products in a particular market.
Argentina is obligated under Article 39.3 of the TRIPS Agreement that requires such data to be
protected against “unfair commercial use.”
Persistent deficiencies in the patent and data protection regime in Argentina deny adequate and
effective protection for the intellectual property rights of BIO’s members. It is not valid to resort
to the so-called “flexibilities” of the TRIPS Agreement so as fail to comply with its provisions.
Discriminatory Procurement Policies
Following legislation from 2001, in 2018 was passed in Argentina Law 27.437 setting
preferences for local produced goods in public purchases. These criteria focusing exclusively on
price and origin of goods could result in disregarding scientific value, quality and the respect of
the medical prescription in case of medicines.
Law 27.437 -locally known as “Compre Argentino” (Buy Argentine)- establishes preferences in
favor of goods of national origin in public purchases and public tender processes. Article 2
establishes that the preference to offers of goods of national origin will be granted when for
identical or similar benefits, in conditions of cash payment, the price of offers of goods of
national origin is equal to or less than the goods offered that are not of national origin, increased
by fifteen percent (15%), when those offers are made by Micro, Small and Medium Enterprises
(SMEs), according to Law 27.264 and its amendments, and by eight percent (8%) for the rest of
the companies. The use of this criteria alone without considering other factors could result in the
selection of suppliers only based on price and local production regarding the quality and the
scientific value proposition of innovative medicines being imported.
Additionally, Law 27.437 establishes that if the value of the request for proposal to purchase
imported goods exceeds the threshold set in Article 10, it must be requested to the bidder to sign
productive cooperation agreements for a percentage of at least 20% of the value of the total bid.
The productive cooperation agreements consist in the commitment of the bidder to acquire local
goods and hire local services linked to the object of the tender.
In public procurement processes or when tendering is used, the award criteria should encompass
the full value that a medicine brings to patients, the health system and society as a whole rather
than just the price or, even worse, exclusively the mere origin of the product.
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Brazil
Although Brazil has made some improvements to its protection of intellectual property over the
years, there are still several persistent problems that hinder Brazil from fully achieving a positive
IP environment across technology sectors, particularly with respect to the biotechnology sector.11
In light of the ongoing problems, BIO recommends that USTR place Brazil on the Priority
Watch List.
Brazil could improve its IP environment by addressing some of the key issues briefly
summarized below. Broadening the scope of patent eligible subject matter for biotech inventions
would be a welcome improvement. In addition, reducing its major patent backlog and having
strong patent enforcement measures in place would send a positive signal to investors and
innovators that it is serious about attracting investment in this sector.
Brazil has taken some positive steps with respect to the role of its health regulatory agency,
ANVISA, in reviewing patentability requirements of pharmaceutical patent applications.
ANVISA’s opinions are no longer binding on the Brazilian Patent Office (INPI) and we
encourage that further progress be made to strengthen the rigor of the Brazilian patent
examination process.
One way to strengthen the patent examination process in Brazil that would benefit biotechnology
companies would be to have Brazil join the U.S. in patent harmonization efforts and strongly
encourage the expansion of the Patent Prosecution Highway partnership between the INPI and
USPTO, so that it is not restricted to the oil and gas sector and, therefore, available to all patent
applicants.
Restrictive Patentability Criteria and Patent Prosecution Practices
The INPI has developed patent examination guidelines for biotech inventions across the health,
agriculture, energy, and industrial biotech sectors. Although offering some improvements and
clarity on INPI positions on patentable subject matter, the guidelines continue to reflect a
restrictive approach to defining patent eligible subject matter and have a narrower interpretation
of these issues than standards adopted in other innovative countries. BIO would welcome
working with the INPI and the innovative biotech community in Brazil to update these
guidelines.
Other INPI resolutions and guidelines that govern the patent prosecution practice present further
obstacles for patent applicants when looking to present amendments, add new claims and/or alter
the scope of protection of claims for patent applications under review. A restrictive approach to
adopting more flexible patent prosecution standards presents challenges to innovative companies
that seek patent protection in Brazil. In addition to restrictive patentability criteria and
challenging patent prosecution rules that are at odds with global best practices, there are several
bills before the Brazilian legislature that may negatively affect the IP environment. For example,
11 For example, this study provides five post-patent law reform bio-medical technology and innovation projects in
the state of Sao Paulo that all show how patents incentivized Brazilian entrepreneurs to bring Brazilian biotech
innovation to the market. See Ryan, Michael P., Patent Incentives, Technology Markets, and Public-Private Bio-
Medical Innovation Networks in Brazil, World Development Journal 38 (2010).
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Bill 139/1999 (5402/2013) seeks to reduce patent term by not allowing for patent term
adjustment and Bill 827/2015 and 5557/2016 may significantly impact the innovative agriculture
sector and the ability to obtain patent protection for agriculture innovations.
Finally, in addition to the patent-specific concerns our industry faces, BIO members also do not
have any regulatory data protection for pharmaceutical products. This lack of data protection
continues to present significant challenges to our sector and signals Brazil’s unwillingness to
support IP assets.
Patent Backlog
INPI has currently an unacceptable backlog – more than 200,000 patent applications pending for
approximately 270 examiners, which extends the examination for more than 10 years. There is
no doubt that the number of patent’s examiners is blatantly insufficient, including for
applications related to biotechnology. In this sense, it remains a great challenge for INPI to
increase and improve its staff and examiners properly. INPI presents every year new plans to
deal with this huge backlog, which results have been continuously unsatisfactory.
The backlog problems may be exacerbated if Bill 139/1999 (5402/2013) before the Brazilian
legislature is passed. The bill seeks to reduce patent term by not allowing for patent term
adjustment, essentially removing the guarantee that a patent will have at least 10 years of patent
term. Patent applicants may effectively expect less than a 10-year patent term considering that
patent applications in the biotech space almost invariably take more than 12 years to issue. Patent
applicants should not be penalized on obtaining meaningful patent term for patent backlog delays
caused by the INPI.
One potential solution to the patent backlog is through collaboration and harmonization with
other foreign IP offices, through programs such as the Patent Prosecution Highway (PPH) that
the INPI currently has with the USPTO and with other global patent offices, such as the Japanese
Patent Office (JPO). The PPH with USPTO is currently restricted to oil and gas sectors and the
PPH with JPO is also restricted to specific sectors that do not include biotechnology. BIO
members are hopeful that if PPH with USPTO is revisited that the program be extended to
additional sectors, including biotech.
Another potential solution to improve the backlog is by creating an accelerated pathway for
obtaining green patents. Although this pathway exists in theory, in practice is still has not yet
reached its full potential. BIO members are hopeful that they will be able to file more patents
through this accelerated pathway as we continue to innovate in this space.
ANVISA’s Questionable Role in Reviewing Patentability Criteria
Brazilian law establishes that the regulatory authority (ANVISA) must provide prior consent on
the grant of a pharmaceutical patent before the INPI issues a patent. ANVISA had interpreted
this requirement as an obligation to review patentability criteria (novelty, non-obviousness, and
utility) and BIO recognizes ANVISA’s recent efforts to minimize its role in the patent review
process.
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BIO maintains that ANVISA’s review of patent applications should, at most, address public
health issues and ANVISA should not, under any circumstance, review patentability
requirements since this is a function that is squarely and solely within the purview of the INPI.
The Federal Attorney General shares this opinion and that determined that ANVISA’s review
should be restricted to an analysis of the sanitary risks of the patented product to health.12 Inter-
ministerial guidance has opined on this issue and have attempted to iron out procedural processes
for the exchange of files between ANVISA and INPI.
In 2017, the acting President Michel Temer participated in the signing of an agreement between
the Ministry of Health, Ministry of Development, Industry and Foreign Trade, ANVISA and the
INPI in which a compromise on prior consent was made. The new agreement establishes that
ANVISA will only review patentability requirements for drugs considered “strategic” to the
Universal Healthcare System and only if a patent application is considered “strategic” may
ANVISA assess patentability requirements. The agreement further stipulates that the ANVISA
opinion on patentability, however, is ultimately non-binding and that the final decision on
patentability rests with the INPI. Although this illustrates some advancement on the issue and
acknowledgement of INPI’s primary role in reviewing patent applications, ANVISA’s presence
in the process still presents concern to BIO membership and is inconsistent with global IP
standards. ANVISA is still notified of patent applications that refer to a “strategic” drug and
ANVISA will still carry out a patentability assessment, albeit a non-binding opinion. In addition,
the list of “strategic” drugs can be updated on an ad hoc basis at any moment without any public
consultation. Giving ANVISA a say on patentability remains inconsistent with its mandate and
may lead to undue interference in patent examination process. Until ANVISA is clearly removed
from the patentability process in Brazil, BIO members will continue to express their concern.
Therefore, the issue continues to present significant problems to our members, creating delays in
the patent examination, and providing unnecessary insecurity with respect to a patent applicant’s
pending patent application.
Enforcement and Royalty Payments
For BIO members fortunate enough to navigate the complicated IP environment and ultimately
obtain a patent, it is concerning that there remain additional obstacles to effectively enforce the
acquired IP right.
For example, the INPI requires registration of license agreements before they can be enforced
against third parties or before royalty revenues can be sent overseas. In addition, royalty
payments cannot be sent overseas unless an actual patent is granted which places some
restrictions on BIO members to license pending patents. Furthermore, INPI can dictate terms
prohibiting parties from freely negotiating contracts and restricting IP owners from fully
exploiting their patents by, for instance, stipulating royalty rates.
12 Accessed on January 24, 2019 and found at:
http://translate.google.com/translate?sl=auto&tl=en&u=http://www.agu.gov.br/sistemas/site/TemplateImagemTexto
Thumb.aspx?idConteudo%3D153676%26id_site%3D3
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There are also concerning developments with respect to enforcement of IP in the agriculture
sector, specifically. Brazil is a member of the UPOV and executed its revision of 1978;
accordingly, Brazil has enacted a plant variety protection (PVP) law, excluding patent protection
for plants in generic terms (i.e. beyond plant varieties). A plant may be protected by the PVP
Law, whereas a gene inserted therein and other related technologies may be protected by the IP
Law. Intellectual Property rights provided by patent protection and PVP are thus complementary.
However, the PVP Law does not have a clear provision on its different and complementary scope
of protection, which allows local farmers and agricultural cooperatives/associations to challenge
payment of royalties on the use of GMO seeds based on a supposed conflict between the IP Law
and PVP Law regarding protection of plants and plant-related technologies. In view of this,
Brazilian courts have been urged to decide on whether PVP law trumps the enforcement of
patents in connection with biotech inventions related or applied to plants. A final decision is
pending on a leading case at the Superior Court of Justice. Our members are very concerned that
a decision limiting patent rights and establishing that the PVP law trumps the patent enforcement
or collection of royalties on saved seeds may completely jeopardize biotechnology innovation in
the agricultural field in Brazil.
Lack of Regulatory Data Protection
Brazilian law (Law 10.603/02) provides data protection for veterinary, fertilizer, and
agrochemical products, but does not provide similar protection for pharmaceutical products for
human use, resulting in discriminatory treatment. Contrary to TRIPS Article 39, Brazil continues
to allow Government officials to grant marketing approval for pharmaceuticals to competitors
relying on test and other data submitted by innovators to prove the safety and efficacy of their
products. Additional efforts are needed to provide certainty that test and other data will be fully
protected against unauthorized use to secure marketing approval for a fixed period of time.
Canada Canada continues to present a number of challenges to BIO’s members. Specifically, new
pricing policies for patented medicines, patent term restoration, injunction relief and are highly
concerning to BIO’s membership. As such, BIO requests that Canada be elevated from the
Watch List to the placed on the Priority Watch List with an Out of Cycle Review to assess the
IP environment in Canada.
BIO would like to reiterate its support of the USMCA and appreciates the Administration’s
efforts to prioritize biotechnology innovation, including provisions that update intellectual
property protections and agricultural market access to 21st century standards. Strong and
dependable intellectual property standards are critical to fueling innovation, attracting
investment, and ensuring that patients, farmers, and consumers around the globe have access to
the next generation of biotechnology breakthroughs. The USMCA represents an important step
in bringing Mexico and Canada closer to high U.S. standards that have made us the world leader
in biotechnology innovation. BIO is hopeful that in this context noticeable improvements will be
made in the IP environment in Canada.
Pricing for Patented Medicines
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In June 2017, Health Canada released a consultation document proposing to change the current
mandate of the Patented Medicines Review Board (PMPRB) from ensuring “non-excessive”
prices to ensuring “affordable” prices, and to change its pricing regulations accordingly.
Subsequently, on December 2, 2017, Canada’s draft Patented Medicines Pricing Regulations
were published. The new regulations are expected to cost the innovative biopharmaceutical
industry over $3 billion annually. Proposed amendments include removing the United States and
Switzerland from the basket of reference countries and to target OECD median prices.
In addition, the regulation would require patentees to report price and revenues, net of all price
adjustments (e.g., confidential rebates). Specifically, the proposal would require patentees to
report confidential rebate data and contains additional language on the potential use of these
data. This provision raises several concerns, including how the PMPRB intends to maintain
confidentiality of data, and whether the collection of this data is within PMPRB’s jurisdiction
under the Patent Act.
Moreover, the proposal includes 3 new factors that PMPRB must consider in determining
whether prices are excessive: “pharmacoeconomic value”; market size; and GDP measures. For
pharmacoeconomic value, PMPRB will use analysis prepared by a publicly funded Canadian
organization and there would be an obligation on patentees to submit most recent cost-utility
analyses, but that there would be no obligation on the patentee to prepare a cost-utility analysis if
one does not exist. However, no details on potential cost-effectiveness thresholds are
provided. How the PMPRB implements “pharmacoeconomic value” remains a significant
source of uncertainty. For market size, it is noted that the “Canadian price could be assessed
against international prices and prevalence (number of people with the disease) levels in an effort
to evaluate the price-volume relationship and establish a reasonable market impact
test. Including the size of the market as a factor would also allow the PMPRB to reassess the
prices of patented medicines over time.” For GDP, it is noted that this could “enable the
PMPRB to develop market impact tests for medicines that are likely to pose affordability
challenges for insurers due to the market size for the medicine.” Patentees would not be
responsible for reporting GDP or GDP per capita.
EU-Canada Comprehensive Economic and Trade Agreement (CETA)
CETA provides for several reforms to Canada’s Patent Act that will have important implications
for the biopharmaceutical industry including the introduction of patent term restoration via
Certificates of Supplementary Protection (CSP) and changes to Canada’s linkage regime. The
effectiveness of the reforms will be determined in regulations that are still being formulated.
The changes negotiated in the CETA text applicable to the biopharmaceutical industry were
intended to elevate Canadian intellectual property (IP) standards closer to those of the EU. BIO
is concerned that the current implementation proposed in the CETA regulations will not achieve
this objective.
For example, there are two main limitations with the CSPs, namely: the CSPs only allow for a
maximum two year period rather than a five year maximum and BIO members need to apply for
regulatory approval in Canada within one year of other major jurisdictions. In addition, changes
to damages rules for generic companies that challenge patent validity may result in windfall
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recoveries that harm patentees reliant on effective, non-discriminatory patent enforcement
regimes.
BIO will continue to urge Canada to implement CETA in ways that improve their IP
environment for biotechnology innovators and seek support from the United States in that effort.
Promise Doctrine
In June 2017, the Supreme Court of Canada issued its highly anticipated decision ruling that the
“promise doctrine” is not the correct method to determine whether the utility requirement in
the Patent Act. Rather, the correct approach is to first identify the subject-matter of the invention
as claimed in the patent, and then ask whether that subject-matter is useful. 13 BIO and its
members welcome this decision and acknowledge that Canadian Courts have not brought this
doctrine back into proceedings. BIO will continue to follow its application in future cases.
Chile
Recent developments regarding the potential use of a compulsory license of patented therapeutic
product would nullify patent rights in favor of providing market access to local generic drug
companies, despite patent holder’s willingness to negotiate an outcome that would avoid a
compulsory license. Due to the increasing threats of a compulsory license, as well as other long
unresolved IP issues such as with respect to data protection for biologics, U.S.-Chile Free Trade
Agreement (FTA) noncompliance, lack of patent term adjustment or patent term restoration,
BIO requests that Chile be placed on the Priority Watch List and to conduct an Out of Cycle
Review to monitor the changing IP and potential compulsory license developments.
Compulsory Licensing
On January 11, 2017, the Chilean Chamber of Deputies of the National Congress passed
Resolution No. 798 to expand the scope and discretion available to the Chilean government to
issue compulsory licenses. That resolution calls on the Ministry of Health (MOH) to “incorporate
and use the compulsory licensing mechanism provided in Article 51(2) of Chile’s Industrial
Property Law ... to facilitate [medicines] acquisition at competitive prices.” It also calls for the
prioritization of certain classes of medicines to be considered for compulsory licensing and
highlights the price reductions realized by certain countries after issuing compulsory licenses on
biopharmaceutical products. In addition, in January 2018, the Chilean Senate approved the
“Medicines II Bill,” which is now pending final approval from the Lower House. That bill seeks
to amend Article 99 of the Sanitary Code to establish that access to medicines is not adequate
“when there are economic, financial, geographic or opportunity barriers that prevent access to a
medication.”
In January 2018, the Chamber of Deputies approved Resolution No. 1014 seeking to establish
that access to certain Hepatitis C medicines is not consistent with the constitutional right to
health, thus warranting a compulsory license.
13 AstraZeneca v Apotex, 2017 SCC 36 (June 30, 2017)
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BIO is concerned that actions such as Resolution No. 798, the pending Medicines II Bill, and
Resolution No. 1014 inappropriately expand, or seek to expand, the scope of compulsory
licensing provisions to pursue cost-containment efforts inconsistent with international
obligations.
In addition to these developments at the legislative level, the Chilean Ministry of Health on
March 9, 2018 issued a declaration of public interest, citing sufficient “public health reasons to
support a compulsory license on a drug for the treatment of Hepatitis C. The declaration was
issued on the last effective day of the Bachelet administration.
On August 28, 2018, Chile’s Minister of Health of the current Pinera administration issued
Resolution 1165, dismissing the legal arguments put forward by the patent holder against the
declaration of public interest, formalizing the current administration’s position with respect to a
potential compulsory license and establishing a formal pathway to proceed with a compulsory
license of a Hepatitis C drug. Since the issuance of a declaration of public interest (DPI) by the
Chilean Minister of Health on March 9, 2018 the new Minister under the Pinera administration
has not met with the patent holder to explore alterative paths to avoid a potential compulsory
license.
The combined efforts at the legislative and executive level of the Chilean government to issue a
compulsory license without reasonable discussion of alternative mechanisms to address access
concerns with the patent holder is of chief concern to BIO and its membership.
Compulsory licenses should be granted in accordance with international agreements and only in
exceptional circumstances. Furthermore, compulsory licensing decisions should be made through
a fair and transparent process that involves participation by all stakeholders. Priority should be
given to a partnership or mutually accepted resolution with the patent holder. BIO feels strongly
that compulsory licensing is not an effective nor sustainable way to address a country’s
healthcare needs, nor is it an indication of a strong national healthcare system, one that ensures
patient access to safe and quality medicines while supporting continued development of
innovative treatments. BIO urges the Government of Chile to uphold its commitments to protect
the intellectual property rights of foreign patent holders and to ensure that current, as well as
future, patients have access to innovative medicines.
Restrictive Patentability Criteria and Patent Prosecution Practices
Chile does not provide adequate protection of data that is required for submission in support of
applications for marketing authorization for biopharmaceuticals consistent with its obligations
under Article 17.10.1 of the U.S.-Chile FTA. Further, Chile does not provide data protection for
biological medicines as required under the same Article of the FTA and as required under
TRIPS. This protection is needed to justify introduction of biopharmaceuticals and encourage
sustained investments in further innovation. Chile does currently provide data protection for new
chemical entities for 5 years. However, for small molecules, the Chilean laws undermine this
protection by placing onerous conditions on the availability of this protection. They also provide
that such protection may be revoked for a broad range of poorly defined grounds, including
“reasons of public health, national security, [and] public non-commercial use,” among other
circumstances. Although to date it has rarely been invoked, such laws create uncertainty with
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respect to data protection and patent enforcement that are not consistent with Chile’s obligations
under either FTA with the United States or provisions of the TRIPS Agreement.
In addition, Chile’s patent laws do not provide sufficient patent term restoration, consistent with
obligations under the FTA, to fully compensate for unwarranted delays in the marketing
approvals process. Chile has established a system where requests for extension must be filed
within six months of the approval and no additional term is available unless the marketing
approval process lasts more than 1 year. The procedure itself lasts around 9 months from the
filing of the extension request to the final ruling by the Industrial Property Court, creating further
delay in extending patent terms.
The patent law in Chile also excludes transgenic plants and animals from patent protection,
thereby limiting the availability of meaningful protection for valuable biotech innovations. To
the extent that protection is available, significant backlogs delay ability to obtain rights essential
to adequately protecting these inventions.
Some members have encountered difficulty obtaining claims addressing dosage regimens (i.e.,
where drugs are administered at a specific dose or in combination with other drugs).
Patentability of claims should be analyzed based on all of the elements. In this sense, there is no
legal grounds to objecting to the dosage element; there should not be an assumption of non-
patentability as there currently appears to be.
Enforcement
Additionally, Chile is not in compliance with its obligations under Article 17.10.2 of the US
Chile FTA to refrain from granting marketing approval for a drug to a third party prior to
expiration of a relevant patent. This is highly important to prevent infringement and devaluation
of intellectual property assets of BIO member companies. The lack of protection is particularly
troubling in light of Chile’s clear obligations under the FTA.
China
For reasons provided in the following paragraphs, BIO requests that China be placed on the
Priority Watch List.
China’s large consumer market presents opportunities for U.S. biotechnology companies to
increase exports and create jobs in the United States. However, failure to adequately protect and
enforce U.S. IPR greatly affects BIO’s members. The China National Medical Products
Administration (NMPA) in May 2017, took initial steps to improve China’s IP environment by
proposing to establish new forms of regulatory data protection and patent linkage systems in
China. However, without coordination with the Chinese National Intellectual Property
Administration (CNIPA) to ensure corresponding revisions to China’s Patent Law, the
effectiveness of the patent linkage system to facilitate early resolution of patent disputes prior to
market entry of the follow-on product may be undermined. In addition, BIO continues to
advocate for China to align its patent administration practices with that of other patenting
jurisdictions, including regarding the treatment of supplemental data submitted in support of
pharmaceutical patent applications. Finally, while BIO welcomes NMPA’s proposal to provide
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six, six, and twelve years of data protection for innovative drugs, new orphan and pediatric
drugs, and innovative therapeutic biologics, respectively, it is important to ensure the
implementing measures take into account industry recommendations for best practices and do
not discriminate against foreign businesses, including small and medium-sized
biopharmaceutical enterprises.
Onerous regulatory requirements or standards that effectively act as localization barriers to trade
can compromise the global biopharmaceutical innovation ecosystem and create economic
inefficiencies as well as unnecessary burdens for enterprises. In this regard, BIO welcomes the
announcement by NMPA in 2017 to accept overseas clinical trial data to support drug
registration in China. Such policies, effectively implemented, would streamline and accelerate
the drug evaluation and approval process in China and improve patient access. However,
localized testing requirements in China, such as the biologics testing requirement and quality
testing of imported commercial products, continue to add unnecessary burden and delay time-to-
market of innovative therapies. Furthermore, China’s clinical research requirements involving
bio-samples and sampling materials, under the management of the Ministry of Science and
Technology, restrict cross-border transport of materials and data for clinical studies and limit
their applicability for future research. Finally, BIO continues to support harmonization of
China’s Pharmacopeia (ChP) requirements with international standards accepted by other
regulators. In some instances, the ChP requirements, as applied, create conditions that favor
domestic manufacturers and can result in unnecessary risks in the global drug supply chain.
Restrictive Patentability Criteria
Our companies have reported that CNIPA has imposed inappropriate limitations on the use of
post-filing data to satisfy inventive step requirements under Article 26.3 of China’s Patent Law.
BIO welcomed China’s commitment at the 2013 U.S.-China Joint Commission on Commerce
and Trade (JCCT) plenary meeting to address this concern, but China’s implementation was
mixed. In April 2017, China released its Amended Patent Examination Guidelines clarifying that
examiners must consider in their examination process certain post-filing supplemental data.
While the amended Guidelines are an important step forward, BIO members are concerned that
post-filing data is still not consistently being considered in connection with inventive step or
other issues associated with the adequacy of a patent application’s disclosure. BIO hopes that
this new provision will be implemented in such a way that supplemental data can be relied upon
to successfully respond to an examiner’s rejection based on adequacy of the applications to meet
disclosure requirements such as industrial utility and enablement. BIO urges USTR and other
U.S. agencies to work with China to ensure effective implementation of rules related to
consideration of supplemental data. Concerns remain that the bar for accepting post-filing data
remains high, especially at the Patent Reexamination Board (PRB).
In biotechnology applications, it appears that CNIPA does not consider the use of percent
identity or hybridization conditions unless they are specifically used in the working examples to
define breadth. As a result, bio-informatics methods of defining sequence scope deemed
acceptable in the patent systems of many countries are not recognized in China. This difference
is problematic as biotech research is expensive and developing the number of working examples
25
necessary to cover all embodiments may not be possible. BIO urges China to consider
harmonizing its approach to this issue more closely to that taken by other major countries.
Patent Term Extensions
Another challenge for biotechnology companies in China involves the lack of patent term
restoration provisions to compensate for regulatory review and patent office delays. The patent
examination backlog at CNIPA and regulatory review delays at NMPA significantly curtail the
effective rights of IP owners. Many other nations include patent term adjustments for patent
review delays and patent term extensions to compensate for the time it takes to gain regulatory
approval for pharmaceutical and agricultural products. This is particularly true of China, which
permits development of a follow-on pharmaceutical product free of patent infringement
allegations (so-called Bolar provision). This attribute of China’s legal regime makes it more
important for innovators to be able to recoup the effective patent term lost as a result of
regulatory and patent office reviews.
In January 2019, China’s National People’s Congress announced draft amendments to the Patent
Law for public notice and comment, and BIO is encouraged by the proposal to authorize patent
term extensions for patents covering pharmaceuticals. However, the proposal contains
concerning conditions, including potentially restrictive eligibility criteria, which warrant further
clarification and revision. Industry has submitted comments to the NPC for consideration and
would welcome a timely and effective implementation of the policy.
Genetic Resource Disclosure Requirements
BIO continues to be concerned that Article 5 of China’s Patent Law prohibits patents for
inventions “relying” on genetic resources where the acquisition or use of those resources is
contrary to the “relevant laws and administrative regulations.” It is disappointing that the
ongoing Patent Law revisions o not appear to address this issue. This provision is ambiguous and
could result in the rejection of applications for deserving new and useful inventions, or even the
revocation of granted patents later found inconsistent with these provisions.
Furthermore, Article 26 of the Patent Law requires patent applicants to indicate the “direct
source” and the “original source” of genetic resources if the completion of the claimed invention
relies on genetic resources. These provisions are intended to implement provisions of the
Convention on Biological Diversity (CBD) relating to access to genetic resources and equitable
sharing of benefits from utilization of these resources. These special disclosure requirements are
ambiguous and as a result impose unreasonable burdens on patent applicants, subjecting valuable
patent rights to great uncertainty. Moreover, the Implementing Regulations define “genetic
resource” to include “material from the human body.” This goes beyond the scope of the CBD,
which excludes human genetic resources. Including human genetic resources however makes
the disclosure obligations of even greater concern to BIO members.
The amendments concern BIO as they could prevent the issuance of patents for new and useful
biotechnology inventions, or perhaps the revocation of granted patents later found to not fully
comply with these provisions. Thus, BIO suggests that these requirements should be deleted.
Alternatively, if the rules remain in force, we suggest that the initial burden shift to the examiner
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to first identify which material the applicant must show “direct” and “original” sources for.
Without such initiative by the examiner the disclosure requirement should not apply. It is also
suggested that any disclosure requirement be limited to the disclosure of the direct source from
which biological material - that is directly claimed in the patent application – is obtained.
In February 2016, China’s Ministry of Science and Technology released the proposed Regulation
on Human Genetic Resources for public comment. BIO is concerned that the draft regulation
defines “genetic resource” to include “data and other information” resulting from human genetic
resources. Further clarification is also needed on certain provisions in the proposed regulation,
including ownership requirements, potential restrictions on procurement, and collection activities
that would exclude foreign funded legal entities.
Effective Patent Enforcement
In comments provided at the request of the United States Patent and Trademark Office BIO’s
identified14, several issues that make it difficult to enforce a patent in China mainly involving the
Courts. Patent enforcement could be improved if BIO’s suggestions, summarized below, are
addressed.
Chinese law requires that the products actually be sold in China before a patent holder can bring
an infringement action. It is not enough to produce the infringing product, or secure regulatory
approval of the infringing product. Additionally, the Supreme Peoples’ Court has cautioned
lower courts from issuing preliminary injunctions for ‘complicated’ technologies (like
biotechnology). BIO believes that China needs to adopt amendments to the Patent Law that
facilitate early initiation and resolution of IP disputes in the pharmaceutical context before
follow-on products are marketed.
NMPA, in the current Provision for Drug Registration Administration, does provide a basic
mechanism that require patent notification by patentees and the submission to NMPA of
“statement of non-infringement” in cases where another party holds a valid patent and allows
generic applicants to submit their application no earlier than 2 years before the expiry of the
patent. However, NMPA has not made the statements publicly available. BIO considers the
current system ineffective in preventing the regulatory approval and sale of infringing drugs in
China. More concerning is the revised draft Provision for Drug Registration Administration
have proposed to remove significant portions of the basic mechanism and may further erode
patent enforcement.
In 2017, NMPA finalized its priority review policy that provides accelerated regulatory review
and approval to eligible drug applications. One of the eligibility categories is if the drug
application meets “urgent and unmet medical needs.” However, to date, China has not provided a
definition for “urgent and unmet medical needs”. Furthermore, BIO is concerned that generic
drug applications may be granted priority review and approval by NMPA in cases where another
party holds a valid patent.
Even when our innovator company wins an infringement suit, damages are insufficient to cover
the true nature of the loss. China provides statutory compensation for infringement, which is
14 See http://www.bio.org/advocacy/amicus-brief/china-patent-enforcement-comments-uspto
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minimal and does not consider sales outside of China. When combined with the inability to get
preliminary injunctions, low damages mean that infringement is encouraged by China’s system.
Regulatory Data Protection (RDP)
Despite having a RDP system, no foreign drug products have effectively received data
exclusivity from China. China proposed a series of reforms in 2017 and 2018, including China
Food and Drug Administration (CFDA) Circular 55 - “Relevant Policies on Protecting
Innovator’s Rights to Encourage New Drug and Medical Device Innovation”, released in May
2017, to strengthen its regulatory data protection regime and to establish a patent linkage system.
In April 2018, NMPA released the draft “Measures on the Implementation of Drug Clinical Trial
Data Protection (For Trial Implementation)”, which, as written, would provide six and twelve
years of data protection for innovative pharmaceuticals and biologics, respectively. While BIO
welcomes this positive movement, the proposal also includes concerning location- and time-
based eligibility requirements. Specifically, the proposal would condition the terms of IP
protection based on number of locally conducted clinical trials, as well as requiring foreign
companies to launch the innovative product first, or simultaneously, in China – which can
potentially delay the introduction of new therapies in other jurisdictions. More importantly, for
small emerging biotech companies that are responsible for more than 75 percent of the medicines
in the innovation pipeline in the U.S. biopharmaceutical industry, these proposed onerous
requirements could inhibit market access.
China is the second largest pharmaceutical market in the world, and BIO member companies are
incentivized to seek marketing approval promptly in China without the need for onerous
regulatory requirements. Moreover, as noted, imposing an arbitrary window for seeking
marketing approval in order to qualify for full RDP could have negative effects. For example,
some companies may have an important reason for delaying entry into the China market, such as
a need to conduct additional testing to address safety concerns due to an adverse event in another
market. Furthermore, emerging biomedical companies that are small and medium-sized
enterprises (SMEs) may not have either the resources or the expertise in global marketing of
products to meet the RDP requirement.
BIO is closely monitoring the revisions to the Drug Administration Law (DAL), the Provisions
for Drug Registration (DRR), and, as appropriate, the Regulation for the Implementation of the
DAL, to ensure the proposed policy revisions are transparently and expeditiously implemented in
a manner that provides for robust and effective IP protection for U.S. biopharmaceutical
companies. It is important to ensure the revisions take into account industry recommendations
for best practices and do not discriminate against foreign biopharmaceutical companies,
including SMEs.
Counterfeit Products
While China has taken steps to combat online sale of counterfeit and substandard medicine,
Chinese law requires proof that violations in counterfeit activity exceed threshold values before
authorities take any action. Although this provision does seem to recognize the limited resources
and prioritization of Chinese enforcement, violators have adjusted by operating in diffuse
networks to make enforcement more challenging.
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In addition, China requires U.S. companies to pursue enforcement actions related to counterfeit
products at the provincial level with no central coordination. This allows suspects to escape
prosecution through the use of diffuse networks to sell counterfeit goods. Local politics also
makes it difficult to affect change. Enforcement authorities generally are skeptical or dismissive
of infringement claims by local competitors and usually try to dissuade any attempt to use the
courts, preferring “local arbitration or mediation,” which tends to produce few results.
China is the world’s top manufacturer of pharmaceutical ingredients and is a leading global
exporter of active pharmaceutical ingredients (API). In China, manufacturers of bulk chemicals
that can be used as APIs are required to register with CFDA if the product manufactured is
intended for use in medicinal products. However, if a company manufactures a bulk chemical
that can potentially be used as an API but does not intend or declare that the bulk chemical will
be used in a finished pharmaceutical product, then CFDA would not serve as the competent
authority.
Furthermore, Chinese manufacturers that only export their products are not subject to regulatory
oversight or review. As a result, industry and media sources report that many bulk chemical
manufacturers produce and export API with little regulatory oversight. While these export
shipments may be legal, non-controlled products can be used for the manufacturing of precursor
drugs or counterfeit and substandard medicine at third countries, then exported to other
destination markets, including China. Company representatives were able to purchase counterfeit
goods in China and in jurisdictions outside of China indicating inadequate supply chain and
distribution controls. Internet pharmacies and other illicit distribution routes allow the
counterfeits to enter foreign markets with intellectual property protection for those products. At
the 2014 U.S-China Strategic and Economic Dialogue, China agreed, during the process of
revising the Drug Administration Law, to consider amendments requiring regulatory control of
the manufacturers of bulk chemicals that can be used as APIs, including “export only” producers
and distributors. BIO requests USTR to continue to promote more effective policy framework
and enforcement directed to combat the manufacturing and distribution of precursor chemicals
and counterfeit medicines in China.
Plant IP Protections
China has a plant variety protection (PVP) law in force, and its patent law excludes patent
protection for plant varieties. SIPO Guidelines however have broadened the patent exclusion to
any animal and any plant claimed in generic terms (i.e. beyond plant varieties). As a
consequence, the SIPO has created a significant gap in intellectual property protection for
inventions in the field of agriculture. Innovators of plant-based inventions cannot obtain
adequate protection for their inventions either with patents ("plants" broadly excluded from the
Guidelines) or from PVP (only applicable to plant varieties). Amending the SIPO Guidelines by
limiting the patent exclusion to "plant varieties" instead of "plants" (and "animal races" instead
of "animals") should remove this gap in protection for agriculture innovations.
Colombia
The Colombian patent law and government initiatives that put IP rights at risk raise a number of
concerns for BIO’s members. In light of these concerns, BIO requests that Colombia be placed
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on the Priority Watch List and to conduct an Out of Cycle Review to monitor the changing IP
and potential compulsory license developments.
Compulsory Licenses
In 2015, Colombia passed laws based on the National Development Plan (NDP) which includes
a mandate to the Ministry of Health requiring review of patents for possible compulsory
licensing. These provisions are directed to the healthcare sector, especially those relating to
pharmaceuticals. In 2016, the Ministry of Health, citing the laws passed under the NDP, issued
declaration 2475/2016 which declared a single drug product, imatinib, of public interest. The
declaration recommended that the National Pricing Commission make a mandatory price
reduction of the product. While this is not technically a compulsory license, such action
effectively undermines the patent rights of the innovator in a similar way.
In December 2017, the Colombian Ministry of Health and Social Protection issued Resolution
5246 in response to a petition filed by Fundación IFARMA on October 28, 2015 (hereinafter
“petition”). That Resolution initiated the procedure for declaring public interest (DPI) over
patents covering direct acting antivirals for the treatment of Hepatitis C. The DPI, if granted,
will effectively destroy the value of patents to which it is applied.
A DPI directed to a broad category of medicines, namely “antivirals for treatment of Hepatitis C”
is unreasonable and should not be permitted; the implementation of such an extreme measure
covering a broad range of products based on unspecified patents raises several issues of due
process and, moreover, would not be consistent with the international obligations of Colombia,
including those obligations under the TRIPS Agreement. We also understand that Hepatitis C
drugs were recently the subject of significant price reductions in Colombia and that there is no
indication that a health-related emergency regarding Hepatitis C exists in Colombia. The
Petition on the Resolution therefore appears to be deficient. BIO believes that the Resolution
should therefore be withdrawn or grant of a DPI refused.
Although to date the compulsory license has not been issued, the threat to BIO’s remains and
presents considerable concern and risk. Colombia will compromise the integrity of its intellectual
property regime if it proceeds with these measures, thereby undermining the introduction of
future scientific innovations. BIO therefore encourages USTR to use all available means to
minimize this threat to a harmonious IP environment with an important trading partner.
Patentability
There are other government initiatives that make obtaining IP rights difficult. For example,
Andean Community Decision 486, which applies in Colombia, denies patents to inventions of
“biological material, as existing in nature, or able to be separated, including the genome or
germplasm of any living thing.” The Andean Decision excludes the patenting of use claims. In
addition, application of Decision 486 denies BIO’s members protection in Colombia for
inventions in chemical polymorphs and isolates that are commonly patented in other
jurisdictions. These practices appear to be inconsistent with the requirements of Article 27.1.
Andean Decision 486 also requires that patent applications include requirements relating to the
acquisition or use of genetic resources if the relevant inventions “were obtained or developed
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from” genetic resources originating in one of the Andean Community countries (Bolivia, Peru,
Ecuador or Colombia). It similarly applies to inventions derived from traditional knowledge
originating in the Andean Community. As noted above, these types of requirements cause great
uncertainty over potentially valuable patent rights that result in significant risks for BIO’s
members. These requirements may result in the outright denial of patent protection for valuable
inventions. In addition, such requirements appear to be inconsistent with Colombia’s obligations
under the TRIPS Agreement.
Patent Infringement Adjudication
Colombia has not effectively implemented provisions of its Free Trade Agreement with the U.S.
that require mechanisms for resolving pharmaceutical patent disputes before entry of a follow-on
product. To implement these provisions effectively Colombia would need to provide
mechanisms for challenging patent validity in courts while applications for generic of biosimilar
marketing approvals are pending.
India
As an important U.S. trading partner, BIO members expect a fair and predictable IP environment
in India. BIO has noted some promising developments recently that may improve the protection
and enforcement mechanisms of IPRs. Efforts, for example, to advance with Patent Prosecution
Highway agreements with foreign Patent Offices are welcomed by BIO membership and
movement on these agreements would send a positive signal to the global biotechnology
community about the IP environment in India. BIO also recognizes recent amendments to the Drug
Price Control Order (DPCO) which exempts innovative drugs from price caps for five years and a
High Court decision ruling for the validity of a patent protecting a genetically modified cotton
seed. However, lack of concrete improvements and lack of resolution of long-standing IP concerns
continue to create a challenging and risky environment for BIO members. Accordingly, we
recommend USTR place India on Priority Watch List with an Out of Cycle Review.
Restrictive Patentability Criteria
Section 3(d) continues to be one of main IP issues in India. Section 3(d) of the Indian Patents Act
explicitly excludes from patentability new forms of a known substance that does not result in
“enhancement of the known efficacy of that substance.” This requirement, interpreted by India’s
Supreme Court to mean “therapeutic efficacy,” excludes from patentability many significant
inventions in the biopharmaceuticals area, such as new forms of known substances with improved
heat stability for tropical climates, or having safety or other benefits to patients that may not result
in “enhanced clinical efficacy” per se. This provision appears to be inconsistent with India’s
obligations pursuant to Article 27 of the TRIPS Agreement, which requires that patents be made
available to “any inventions … in all fields of technology, provided that they are new, involve an
inventive step, and are capable of industrial application.” Further, Section 3(d) effectively creates
an additional hurdle to patentability that is applied only to certain chemical products, and therefore
appears to violate the non-discrimination clause with respect to field of technology set forth in
TRIPS Article 27.
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This section is applied in a very generalized manner without providing any objective reasoning by
the Indian Patent Office (IPO), especially with respect to new chemical entities (NCE), wherein
the said NCE’s are neither mere discovery of new form of known substance or nor new use of
known substance.
BIO has expressed concern that the Patent Guidelines as applied are biased against pharmaceutical
patents and the Controller General (CG) indicated that the IPO would reconsider the Guidelines to
ensure that they do not result in a negative bias toward pharmaceutical patents. This situation has
in fact encouraged third parties to continue to misuse this section during opposition, appeal and
revocation proceedings, before the IPO, IPAB and Judiciary. There seems be no efforts by the IPO
to provide any further guidelines or clarifications in interpretation of this section during the
examination procedure.
Moreover, we have noted that there has been a significant increase in objections under Section
3(e) by the IPO, which deals with patenting of admixture. The existing guidelines with respect to
this section in Manual of Patent Office Practice and Procedure (MPOPP) are incomplete and
inadequate. The IPO continues to have a more individualistic approach in analysis, interpretation
and decisions while dealing with Section 3(e). All of this indicates that there is an increasingly
unpredictable environment for obtaining IPRs.
Patent Disclosure Requirement
India’s Patents Act requires applicants to disclose the source and geographical origin of biological
materials used to make an invention that is the subject of a patent application. Failure to identify
correctly the geographical source of a biological material can result in revocation proceedings.
These special disclosure requirements and the scope of what constitutes a genetic resource are at
best ambiguous, subjecting the validity of valuable patent rights to damaging uncertainty.
Plant Intellectual Property Protection
India adopted a plant variety protection (PVP) in 2005 but excludes patent protection for plants
per se in broad terms. As a consequence, innovators of plant-based inventions cannot obtain
adequate protection for their inventions either with patents ("plants" broadly excluded) or from
PVP (only applicable to plant varieties but not all crops). Amending Section 3(j) of the Patent Act
by limiting its exclusion to "plant varieties" instead of "plants" (and "animal races" instead of
"animals") should positively remove this gap in protection for agriculture innovations.
Regulatory Data Protection
India still has not implemented any meaningful protection for the data that must be generated to
support efficacy and safety claims of pharmaceutical and agricultural chemical products. Under
Article 39.3 of the TRIPS Agreement, in addition to providing trade secret protection, governments
must separately prevent unfair commercial use of regulatory test data.
The absence of regulatory data protection (RDP) is a significant problem for BIO members
because India’s drug regulatory agency approves generic company applications to market generic
drugs based on an abbreviated submission that includes reliance on the innovator’s safety and
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efficacy data. This creates an unfair commercial advantage for Indian generic companies. BIO
urges India to implement effective and meaningful periods of regulatory data protection.
Effective Patent Enforcement
Central government and State regulatory authorities are not required to verify or consider the
remaining term of any existing patents. Accordingly, generics are approved without regard to
patent term of originator product. BIO supports development of a notification and early resolution
mechanism for patent disputes to give innovators security in knowing that their efforts in creating
a new drug will be respected for the duration of the patent period similar to patent linkage in the
U.S. CDSCO’s recent effort to reform the SUGAM initiative under draft Notification GSR 629(E)
provides an opportunity to facilitate the notification of manufacturing applications between
government agencies and patent holders. BIO members urge the Ministry of Health and Family
Welfare (MOHFW) to take immediate steps to increase transparency and cooperation between
central and state medicines regulatory authorities. At a minimum, MOHFW should ensure all
biopharmaceutical manufacturers, the relevant Indian authorities and the broader public have
timely notice of marketing and manufacturing applications filed with central and state regulators.
There is also a lack of a proper mechanism for controlling, stopping and prosecuting entry of
counterfeit patented non-approved drugs in India through its porous borders. There has been a
significant number of counterfeit drugs entering from Bangladesh and Sri Lanka in India.
Compulsory Licensing
Provisions of the Indian Patents Act provide broad authority for the issuance of compulsory
licenses, including authority on the basis that the patented products are not “worked”
(manufactured) in India. In a 2012 case involving a BIO member, a compulsory license was issued
on these grounds. This decision was not overturned on appeal. Recent cases have since been
brought, however, courts seem to have moved from this working doctrine as the justification for a
compulsory license. Nevertheless, the lack of any clear guidelines/clarifications from the IPO, still
presents a challenge and the threat of compulsory licenses remains.
For instance, the Patent Office requires all patentees submit a yearly “statement of working” that
proves that the patentee is exploiting its invention in India.15 If the company does not comply, the
government may issue a compulsory license. This provision may result in the loss of intellectual
property rights in India when a biotechnology company cannot “work” a medicine due to
extraneous conditions (such as a USFDA “clinical hold”). There remain uncertainties as well as to
whether the importation of patented drugs satisfies the working requirement, despite consultations
with stakeholders and deadlines to provide some clarity on the matter.
BIO members are also concerned about the non-transparent manner in which the Ministry of
Agriculture (MoA) issued Gazette Notification No. 1236 dated May 18, 2016, prescribing
licensing guidelines and formats for genetically modified technology agreements. The notification
prohibited the licensor of an approved genetically modified agricultural technology to refuse grant
of a license to any eligible seed company wanting to incorporate it into its own hybrids or varieties,
15 http://www.ipindia.nic.in/iponew/publicNotice_21January2015.pdf
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which has the practical effect of a compulsory license. BIO encourages the MoA to involce all
stakeholders before finalizing the Guidelines.
Administrative Burden and Delay
Another concern involves extensive delays in examination that sometimes occur as a result of
opposition procedures. Companies often wait for years for a patent application to enter into the
examination process only to have the claims opposed in a pre-grant proceeding. The additional
delay in the process results in applications being held up indefinitely, resulting in the loss of the
majority of the effective patent term. Companies have also reported delays in the post-grant
opposition proceedings. Companies have reported waiting years for a decision. The existence of
both a pre- and post-grant opposition proceedings – as they are currently applied - create problems
as a U.S. company that survives a pre-grant opposition proceeding can then later face a post-grant
proceeding from the same opponent.
For example, pre-grant opposition procedures under Section 25 of India’s Patents Act have created
significant uncertainty and delayed the introduction of new inventions by undermining patent
office efficiency and delaying patent prosecution – exacerbating India’s already significant patent
examination backlog. The provision of Pre-grant opposition allows, any party to file a pre-grant
opposition, any time after the publication of patent application till the grant of patent. This has led
to many frivolous multiple pre-grant oppositions being filed by third parties or individuals, many
of such frivolous pre-grant oppositions being filed just near the prosecution hearing proceedings
or before the grant of patent or near the issuance of Examination Report. This had led to delay in
grant of patent and can be considered a delaying tactic by third parties.
The Indian generic industry routinely uses this opposition process to delay the grant of U.S.
biotechnology patents in order to produce their own legal copies of products that otherwise should
be enjoying meaningful patent protection in India as they do in other countries. Patent term
extensions to compensate for such losses do not exist in India, further exacerbating the problem.
Due to the broad nature of post-grant challenges, unlimited pre-grant opposition should be
curtailed to better reflect international practice. The ability of third parties to submit references
prior to patent grant are sufficient and should be the preferred method of challenge pre-grant.
Naturally, these challenges make the process of obtaining an IPR in India a costly and risky
endeavor.
The Patent Division of the IP Appeal Board (IPAB) continues to remain non-functional despite
the appointment of a new chairman in January 2018 primarily because the position of patent
technical member remains vacant. This lack of functionality in the IPAB patent division has not
only significantly increased the backlog of pending patent appeals but it has significantly impeded
the issuance of many patents. BIO strongly urges that a patent technical member be appointed as
soon as possible so that Patent Division of IPAB becomes functional.
Preliminary Injunctions
The Indian Courts have taken steps to issue Preliminary Injunction (PI) during litigation
proceedings, however, there still appears to be substantial inconsistency in the manner in which
PIs are issued. The courts issue PI’s by inconsistent application of the “status quo doctrine”. In
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many instances, the courts have misapplied the legal doctrine by treating the infringement that
precedes or accompanies the request for preliminary relief as part of the “status quo” and thus
rejecting the issuance of an injunction or even limiting its scope. Consistency in determining PIs
will encourage investment decisions and will also enable pre-litigation negotiations between the
litigating parties.
Effective Patent Enforcement
CDSCO’s recent effort to reform the SUGAM initiative under draft Notification GSR 629(E)
provides an opportunity to facilitate the notification of manufacturing applications between
government agencies and patent holders. BIO members urge the Ministry of Health and Family
Welfare (MOHFW) to take immediate steps to increase transparency and cooperation between
central and state medicines regulatory authorities. At a minimum, MOHFW should ensure all
biopharmaceutical manufacturers, the relevant Indian authorities and the broader public have
timely notice of marketing and manufacturing applications filed with central and state regulators.
Indonesia
In addition to discriminatory IP policies, BIO members have concerns with listing decisions that
take into account price and the Social Insurance Administration Organization’s budget and do
not reflect all of the evidence submitted, including scientific data demonstrating drugs’ safety
and efficacy. Furthermore, Halal certification represents a mandatory labeling requirement that
could have unexpected negative implications on patient health. BIO’s concerns for specific
provisions of the new patent law are summarized below.
For reasons provided below, BIO urges USTR to place Indonesia on the Priority Watch List.
Restrictive Patentability Criteria
The 2016 Patent Law precludes patents on new uses and establishes an additional patentability
criterion of “increased meaningful benefit” for certain forms of innovation prominent in
biopharmaceutical technology (i.e. new salts or new dosage forms). These restrictions undermine
support for important innovations and appear to conflict with existing international obligations by
imposing additional or heightened patentability criteria that discriminate against classes of
technology.
TRIPS requires that patents be available for inventions that are new, involve an inventive step, and
are capable of industrial application. The Patent Law impermissibly adds a fourth substantive
criterion for chemical innovations of “increased meaningful benefit” to the three criteria set forth
in Article 27 of TRIPS. Adding a fourth substantive hurdle to patentability for specified
technologies is discrimination that harms members of BIO and should not stand scrutiny under
Indonesia’s international obligations.
Article 27 of TRIPS also requires grant of patents in “all fields of technology, provided they are
new, involve an inventive step and are capable of industrial application”. This prevents
discrimination against a field of technology and barring patents on new uses or indications violates
that prohibition. These are misguided policies that discriminate against innovators who build on
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prior knowledge to develop valuable new and improved treatments that can improve health
outcomes and reduce costs by making it easier for patients to take medicines and improving patient
adherence to prescribed therapies.
In addition, Indonesia’s Patent Law states that a patent holder shall produce a product or use
processes in Indonesia – such policies are not only inconsistent with Indonesia’s international trade
commitments, they are effectively forced localization and technology transfer policies that benefit
the domestic industry at the expense of foreign innovators.
Compulsory Licensing
In September 2012 Indonesia issued a decree authorizing government use of patents for nine
patented pharmaceutical products as a group without dealing with the products and relevant
licenses on a case-by-case basis. This raises significant concerns about consistency with
Indonesia’s TRIPS obligations and other international norms. TRIPS Article 31(a) requires such
licenses be considered on a case-by-case basis rather than as a group. Article 31(i) also requires
the ability to appeal the compulsory license to a judicial or other independent body. No such
appeal seems to be available in Indonesia.
The indiscriminate use of compulsory licenses draws investment away from the biotechnology
sector that is heavily reliant on patents to generate investment funding. Indonesia’s actions on
compulsory licensing are inconsistent with their stated desire to create an enabling environment
for innovation in the life sciences.
The Patent Law creates additional uncertainty by discouraging voluntary licensing agreements
between private parties and by promoting compulsory licensing on grounds that are vague or
appear to be inconsistent with Indonesia’s international obligations. Provisions of the new law
appear to require disclosure of private license agreements and allow compulsory licensing if a
patented product subject to the agreement is not manufactured in Indonesia. Requiring disclosure
of private agreement terms would in itself discourage entry into such agreements to the detriment
of Indonesia. That is compounded by a local manufacturing requirement that also appears to
contravene Indonesia’s national treatment obligations pursuant to which manufacturers should be
able to meet the “local working” requirements through importation.
BIO members believe that CLs are not a sustainable or effective way to address healthcare needs.
Voluntary arrangements independently undertaken by member companies better ensure that
current and future patients have access to innovative medicines. BIO members urge Indonesia to
work with BIO members to develop sustainable solutions to access problems while maintaining
support for IP mechanisms fundamental to development and dissemination of new medicines to
patients in Indonesia.
Regulatory Data Protection
Indonesia does not provide adequate regulatory data protection that prevents “unfair commercial
use” of regulatory data on pharmaceutical and agricultural chemical products as required by
Article 39.3 of the TRIPS Agreement. The introduction of effective data protection for regulated
pharmaceutical and agricultural chemical products would contribute significantly to providing
adequate and effective protection of intellectual property rights in Indonesia for BIO’s members.
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Patent Term Extension
In addition, there are no provisions for patent term extension in appropriate circumstances. This
has a detrimental effect on the value of biopharmaceutical patents in Indonesia.
Counterfeit Medicines
BIO’s members also report problems with counterfeit medicines, despite recent steps taken by
Indonesia that include the establishment of a National Anti-counterfeiting Task Force. The lack
of expertise and resources in the courts and law enforcement agencies create problems for BIO
companies. Corruption at the local police level is another challenge in Indonesia when trying to
enforce a patent. BIO requests that USTR further engage with Indonesia to put in a place a
system that provides adequate and effective protection for intellectual property rights.
Counterfeit biopharmaceuticals produced in Indonesia also pose a substantial safety risk for
patients. More international oversight is required to regulate the normal distribution channels of
counterfeits including internet pharmacies. Enhanced education in the medical sector could help
warn of the dangers of obtaining dangerous counterfeit medicines from unauthorized suppliers.
Annuity Fees
The Indonesian Patent Office recently issued invoices for past annuity payments on previously
abandoned patents which were not expressly withdrawn from the patent office. Annuity
payments are the renewal fees innovators pay to maintain a granted patent. The invoices
received from the Indonesian patent office represent up to 3 years of annuities as well as back
taxes if due. The amounts are significant and if companies do not pay, they have been threatened
with property seizure. This practice is not in line with the major patent offices and it is one that
USTR should raise in anticipation of potential negotiations with the Government of Indonesia.
Plant Variety Protection
In addition, while Indonesia has implemented a plant variety protection (PVP) system, BIO
members report that the level of protection is inconsistent with the International Convention for
the Protection of New Plant Varieties. The lack of appropriate protection for new plant varieties
remains a crucial issue for BIO’s agricultural members.
Japan
BIO recognizes Japan’s continued efforts to reward innovation in its regulatory framework and
to improve efficiency in its drug evaluation and approval system. However, BIO member
companies are concerned that the new drug pricing reform package, approved by the Central
Social Insurance Medical Council (Chuikyo) of the Ministry of Health, Labor and Welfare
(MHLW) in December 2017, will undermine the tremendous progress made by relevant
authorities to exalt Japan as a leading market in the global biotech ecosystem. Notably, the
revisions to the Price Maintenance Premium (PMP) program, the pending Health Technology
Assessment (HTA) system, as well as other changes to the pricing rules, may deprive innovators
in the United States and elsewhere of fair remuneration for their technology, divert American
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technology and jobs to Japan, and otherwise undermine, as well as undervalue, American
ingenuity and innovation.
BIO welcomes the inclusion of procedural fairness for pharmaceutical and medical devices in the
U.S.-Japan Trade Agreement (USJTA) Objectives. BIO supports a comprehensive USJTA and
the U.S. Government’s specified objective to “ensure that government regulatory reimbursement
regimes are transparent, provide procedural fairness, are nondiscriminatory, and provide full
market access for U.S. products, particularly under relevant Japanese measures.”16
Cross-border collaboration in the biopharma sector has intensified in recent years between the
United States and Japan, in part because of important progress and reform within Japan’s drug
regulatory system that now approves products on a similar time frame as the United States.
Advances in scientific research in both countries have also increased the opportunities for
collaboration. However, a variety of aspects of Japan’s system for pricing and reimbursing new
drugs now threatens to hinder innovation in Japan, and with it, opportunities that small, medium-
sized and large biopharma companies in the United States have to develop and launch new drugs
in Japan. Some of these developments particularly make it difficult for small companies to
consider developing and launching in Japan. Accordingly, BIO recommends USTR place Japan
on the Priority Watch List.
Technology Localization and Impact on Small and Medium Sized Enterprises
Under the new PMP program, eligible companies must satisfy specific criteria in order to receive
the full pricing premium, including requirements on the level of R&D conducted in Japan.
Eligible companies that do not meet the requirements would receive a reduced level of the
premium. Such policy would not only provide preferential treatment to domestic firms at the
expense of foreign ones, but furthermore, it conditions the preferential treatment on R&D
localization, as firms will be judged on the number of localized clinical trials. It is particularly
concerning that eligible biopharmaceutical firms that are small and medium sized enterprises
(SMEs) are expected to be excluded from the full pricing premium under the program, as SMEs
typically have a lower level of R&D activities and investments in Japan compared to large drug
developers.
The restrictive PMP criteria, which effectively discriminate against SMEs, appear to be contrary
to the pro-innovation policies of the Japanese government. SMEs, which constitute the vast
majority of BIO’s member companies, are a critical innovation force in the biomedical industry.
These life sciences start-ups and emerging biotech companies are responsible for 70% of the
global clinical pipeline and 84% of all Orphan-designated products in development17. As the
eligible SMEs lack the necessary resources and pipeline to satisfy the localization requirements,
exclusion from the full pricing premium may encourage American SMEs to out-license early
stage drug development and transfer technology and intellectual property to enterprises in Japan
in order to ensure their innovative products are appropriately valued.
16 United States-Japan Trade Agreement (USJTA) Negotiations: Summary of Specific Negotiating Objectives.
USTR, December 2018. 17 Emerging Therapeutic Company Investment and Deal Trends, David Thomas and Chad Wessel. BIO Industry
Analysis. 2016.
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Non-transparent Nature of Pricing and Reimbursement (P&R) Policy Making
BIO has long been concerned with the non-transparent, and non-inclusive nature of policy
making with respect to P&R for new drugs. In particular, we find the Chuikyo process seriously
defective with regard to its provision of advance notice of issues to stakeholders, and its limited
opportunities for such stakeholders to engage. We believe it is unfair for one of the world’s
largest markets for new medicines to do such a poor job of reaching out to the U.S. biotech
community – which originates a large number of all new medicines globally – for its input.
Outreach to large U.S. companies located in Japan is also deficient, but even that does not
include any input by our SME members, which are the backbone of this industry.
Systemic Discrimination Against Innovative Medicines in the Budgeting Process –
Undervaluation of Innovation
BIO recognizes that the Japanese health care system faces fiscal constraints. But time and again,
we find that health care budgets disproportionately limit spending on new innovative medicines
(e.g., the percentage of budgetary cuts far exceed our percentage of health care expenditures)
compared to other health care services and products, despite the fact that many new medicines
create significant health care savings in the longer run. Bluntly put, new medicines which are
predominantly developed abroad (mostly in the U.S.) face much deeper cuts than Japanese
constituents in the health care system such as doctors and hospitals. This is not only unfair and
discriminatory, it systemically works to undervalue new medicines and therapies, undermines IP,
and stunts incentives for biopharma innovation within Japan.
A Rigid Health Technology Assessment (HTA) in Japan Could Exacerbate the
Trend of Anti-Innovation
BIO is concerned that existing plans to develop a rigid cost-effectiveness-based HTA system, to
be announced in March 2019, will be constructed in ways that further disincentivizes innovation
in Japan, add to costs (particularly burdensome for small companies) and potentially delay
patient access to new medicines. In addition, the methodology used by the Government of Japan
in its HTA pilot, on which the HTA system will be based, was not developed in a transparent
process and deviates from standard methodologies aligned with the latest available science. The
process and methodology should be revised in a transparent manner prior to establishment of
HTA in Japan. Any future HTA system needs to encourage innovation, not be unduly
burdensome, incorporate a broad set of benefits in the value framework, and not simply be used a
tool for rationing care to Japanese patients.
Regulatory Data Protection
In accordance with the Trade Promotion Authority Act requiring the U.S. government to
leverage trade agreements to bring our trading partners in line with U.S. standards for intellectual
property rights, BIO strongly believes the U.S. standards of data protection for biologic products
(12 years) remains the gold standard and should be the basis for negotiations with Japan. The
39
recently concluded US-Mexico-Canada Agreement presents a strong foundation from which to
build and achieves a standard closer that U.S. law. In addition, BIO would welcome a strong
patent enforcement mechanism, including patent term restoration to address patent examination
delays.
BIO continues to urge the Japanese government to ensure robust and consistent stakeholder
consultation as it implements the new drug pricing reform package, so to assure predictability
and transparency of the drug pricing system in the Japanese market. As the United States and
Japan have been engaged in intensive bilateral trade talks involving the biopharmaceutical sector
for over 30 years – starting with the advent of “MOSS talks” in 1986, there is a rich record of
discussions, agreement and achievements up which to build in any new Trade Agreement.
Russia
BIO members continue to experience challenging problems in Russia that lead BIO to request
that USTR place Russia on the Priority Watch List.
IP Enforcement
Patent enforcement against infringing companies remains a large concern, especially against
local Russian companies.
Preliminary Injunctions
In Russia, an innovator cannot sue for patent infringement upon first learning of a request for
generic marketing approval. Rather the patent-holder must wait until the generic drug is
approved. Russian courts compound this problem by not typically granting preliminary
injunctions or even permanent injunctions at the end of successful litigation.
Procurement Processes
On December 5, 2016, the Ministry of Health put forward draft regulations to restrict identifying
criteria for medicines in the state procurement process; dosage form, treatment method or other
characteristics would no longer determine eligibility, only an International Nonproprietary Name
(INN) would be required. This would further undermine incentives to innovate and the quality,
safety and efficacy of treatments available to patients.
Regulatory Data Protection
The Law on the Circulation of Medicines sets forth the basic regulations for biologics and
biosimilars. A revision to Federal Law 61 allows follow-on manufacturers to apply for
registration of a generic drug four years following marketing authorization for original small
molecule drugs and three years for an original biologic medicine (4+2 and 3+3). Without
adequate enforcement mechanisms (noted above), the generic can be placed on the market prior
to the expiration of the six-year data protection period. The biopharmaceutical industry is
concerned that the amendments to FL 61 will further weaken RDP in Russia.
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Unclear Regulatory Standards for Orphan Drugs
Access to the Russian market for orphan drugs is also impacted by unclear and changing
regulatory standards. Since 2013, the Russian Ministry of Health (MOH) has amended the rules
for the inclusion of drugs into the Vital and Essential Drugs List (EDL). The amendment
process delayed the updating of this list to include new drugs. The regulation went through
several drafts with changes to the submission template, assessment timelines and criteria, and the
information requirements until it was finalized in May 2014.
Compulsory Licenses
More recently, senior Russian government officials have indicated a desire to more
systematically use compulsory licensing to address access and pricing. For example, the Russian
Federal Antimonopoly Service (FAS) is seeking expanded compulsory licensing provisions,
which would mean pharmaceutical companies could lose their exclusive rights to certain
products. Additionally, under TRIPS Art. 31(l), codified under article 1362 of the Civil Code, a
Court may grant a compulsory license if the invention claimed in a second patent (the dependent
patent) involves a technical advancement or has economic advantages over the first patent. The
courts in Russia have misapplied this law. Multiple cases were filed by local firms for the local
production of generic versions of innovator oncology drugs based on their own dependent
patents. This raises serious concerns about the ability of innovators to meaningfully enforce
patents in Russia and will discourage investors and innovators from bringing products into the
market. We urge the USG to monitor this situation closely and to encourage their Russian
counterparts to avoid misuse of this tool.
Parallel Importation
The Eurasian Economic Union (EAEU) comprised of Russia, Belarus Kazakhstan, Armenia, and
Kyrgyzstan, entered into force on January 1, 2015. The EAEU envisages the gradual integration
of the former Soviet countries' economies, establishing free trade, unbarred financial interaction
and unhindered labor migration. The first sector which it plans to integrate is the pharmaceutical
sector through creation of a single pharmaceutical market. There is discussion of using the
framework to facilitate parallel importation of cheaper medicines into the Union. On November
16, 2016, the EAEU Intergovernmental Council approved the main suite of regulations necessary
to set up a common pharmaceutical market in the EAEU so the regulations must now be
approved and implemented at the national level. The potential reliance on parallel importation
and the counterfeit and economic problems it can bring are concerns for BIO members that
warrant further attention.
Counterfeit Medicines
With respect to counterfeit medicines, the Russian Parliament adopted new legislation aimed at
criminalizing (1) counterfeiting and (2) distribution of counterfeited and falsified medicines,
falsified biologically active supplements, unregistered medicines, and medical devices. The law
became effective in January 2015 and reflects the serious public health concerns associated with
the distribution of fake and potentially dangerous medicines to patients. BIO’s member
companies are encouraged by this legislation, but close monitoring will be necessary to ensure
41
enforcement, as well as active participation in discussions around developing an effective
tracking system for medicines in the EAEU.
Government Procurement
Despite statements expressing support for accession to the WTO Agreement on Government
Procurement (GPA), Russia continues discriminatory practices in its government procurement
system. Russia has adopted a regulation that bans foreign participation in tenders in cases where
two or more companies from the Eurasian Economic Union (EAEU) have bid to supply
medicines included on Essential Drugs List. Moreover, Russia has maintained its policy of
providing locally made pharmaceuticals a 15% price preference in government procurement
tenders and is considering legislation that would disqualify imported products from the tender
process if local active pharmaceutical ingredient (API) is available. These discriminatory
practices are a significant concern for the biopharmaceutical members of BIO.
Saudi Arabia
BIO members continue to face significant IP challenges in Saudi Arabia and seek assurances that
patents will be protected and enforced. Accordingly, BIO recommends USTR place Saudi Arabia
on the Priority Watch List.
Though Saudi Arabia introduced a patent linkage system in 2013, we have seen some significant
issues with intellectual property in the Kingdom. The Saudi Food and Drug Authority (SFDA)
has effectively overridden the country’s linkage regime by granting market approval for a
follow-on product to a patented medicine. Instead of providing the rightful legal action, the Saudi
government has put the onus on the innovator and infringing company, a local Saudi
manufacturer, to deal with the situation.
This follows the 2016 violation of regulatory data protection involving an innovative hepatitis C
medicine. The Saudi Food and Drug Authority (SFDA) granted marketing authorization and set
prices for two unauthorized generic copies of the medicine to two local companies, apparently
relying on test data submitted by the innovator. Compounding the problem of infringement, the
Ministry of Health proceeded with procurement of one of the infringing products despite
multiple appeals from the innovator company. A local company is now distributing this
unauthorized copy to the Ministry of Health and selected hospitals.
While Saudi law provides for regulatory data protection, in practice it is not applied effectively.
Specifically, Article 5 of a Council of Ministers’ Trade Secrets Protection Regulation (decision
No. 50, dated 25/2/1426 H, April 4, 2005), states that the submission of confidential tests or
other data, obtained as a result of substantial efforts, for the approval of the marketing of drugs
or agricultural products which utilize a new chemical entity, shall be protected by the competent
authority against unfair commercial use for at least five years from the approval date.
Unfortunately, the Kingdom of Saudi Arabia has not complied with its own regulation and WTO
commitments which gave rise to the regulations.
Saudi Arabia confirmed during its accession to the WTO that:
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“[Its] Regulations provided for protection of undisclosed tests and other data
submitted to obtain approval of a pharmaceutical or agricultural chemical against
unfair commercial use for a minimum period of five years from the date of
obtaining the approval including the establishment of the base price. No person
other than the person who submitted such data could, without the explicit consent
of the person who submitted the data, rely on such data in support of an
application for product approval. Any subsequent application for marketing
approval would not be granted a market authorization unless the applicant
submitted its own data, meeting the same requirements applied to the initial
applicant, or had the permission of the person initially submitting the data to rely
on such data.” 18
Member companies have approached Saudi authorities concerning the need to enforce their
regulations on regulatory data protection; yet authorities insist they are not sharing the content of
the drug registration file of the innovator product—deflecting from the substance of the
complaint.
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),
however, imposes more than a non-disclosure obligation. Rather, TRIPS Article 39.3
additionally requires WTO member states to implement an effective system of pharmaceutical
drug registration, which prevents “unfair commercial use” of data generated by others.
This is fulfilled by preventing reliance on regulatory test data and approvals based on such data
for a fixed period of time. In other words, the data may not be used to support marketing
approval for follow-on products for a set amount of time unless authorized by the original
submitter of the data.
Issues of patent infringement and the lack of regulatory data protection enforcement are greatly
concerning in this G-20 economy, as was the Saudi Governments refusal to engage the industry
or affected companies for many months as the crisis deepened. This negative development for
Saudi Arabia and runs counter to the goals and general principles of both the Vision 2030 and
National Transformation Program 2020.
South Korea
BIO requests that USTR place South Korea on the Priority Watch List for pricing and
reimbursement policies that undervalue innovative biopharmaceutical products, deficiencies in
their intellectual property system, and failure to adequately implement their free trade
obligations. As USTR engages South Korea in the context of KORUS, we request the following
issues be prioritized.
Pricing and Reimbursement Policies
BIO member companies are concerned with the lack of robust enforcement of the KORUS
provisions on innovation, IP and market access. Despite commitment under KORUS to value
18 Report of the Working Party on the Accession of the Kingdom of Saudi Arabia to the World Trade Organization,
WT/ACC/SAU/61 (Nov. 1, 2005) ¶ 261.
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U.S. innovation appropriately, S. Korea continues to restrict the pricing of innovative medicines
through an unreasonable valuation scheme. For example, the government seeks to significantly
reduce the price of innovative products by linking prices of newly patented products to the
discounted prices of off-patent and generic products. In addition to the lack of recognition of IP
in its pricing and reimbursement scheme, the Korean government also conditions preferential
pricing policies on various performance requirements, including localized manufacturing and
R&D, joint partnerships with domestic firms, as well as “social contribution”.
BIO commends the U.S. Government for its efforts to improve KORUS through negotiations and
for securing an outcome on pharmaceutical reimbursements in 2018 that calls on the S. Korean
Government to amend its Premium Pricing Policy for Global Innovative Drugs to make it
consistent with Korea’s commitments under KORUS to ensure non-discriminatory and fair
treatment for U.S. pharmaceutical exports. To this end, Korea’s Health Insurance Review and
Assessment Service (HIRA) committed to publishing a draft amendment to its pricing policy by
October 31, 2018, with the purpose of implementing the amendment no later than December 31,
2018. In addition, HIRA agreed to allow for meaningful and transparent consultation with U.S.
stakeholders.
Burdensome Data Requirements for Patent Applications
South Korea’s data requirement for patent applications raises concerns similar to those noted in
respect to China. South Korea should modify its rules of practice to allow companies to
supplement the data contained in original patent applications during patent prosecution and post-
grant validity challenge proceedings, as is allowed in most other countries.
South Korean patent law requires that for a medicinal use invention, the original specification
(i.e., the international application in most cases) must contain quantitative pharmacological data
for at least one specific active ingredient, unless the pharmacological mechanism was established
prior to the filing date of the patent application.19 If such pharmacological data is not included in
the original specification, the application will be rejected (or the granted patent subsequently
invalidated). Moreover, South Korea does not permit the applicant or patent owner to submit
such data in response to an office action or post-issue invalidation proceeding.20 If an invention
is based on a finding of little or no side effects or toxicity, South Korean patent law still requires
that data supporting such effects be contained in the original specification.
The extreme pharmacological data requirement in Korea creates unfair, discriminatory obstacles
for innovative biopharmaceutical companies. Moreover, almost all other countries’ patent
offices do not require that amount of pharmacological data in the original application, or those
offices allow submission of such data during patent prosecution. Consequently, many
19 This requirement has been strictly interpreted by the courts and the Korean Patent Office: Disclosing the IC50
range for a group of compounds without specifying which compound provides which value is not sufficient to
satisfy the data requirement (see voluminous case law on this subject, including In re Allergan (Supreme Court Case
99 Hu 2143; November 27, 2001)). 20 Later addition of such data to the specification constitutes adding new matter and is not allowed [see, e.g., In re
Pfizer (Supreme Court Case 2000 Hu 2965; November 30, 2001)]. However, if the original specification contains
pharmacological data for at least one compound, it may then be possible to submit data for other compounds in
response to an office action that states that the claims are not adequately supported by data.
44
biopharmaceutical inventions that are patentable in other countries are not patentable in South
Korea for failure to meet South Korea’s data requirement.
Another problematic aspect of South Korea’s data requirement is related to prior art references.
During the original patent prosecution or in post-issue invalidation proceedings, if a prior art
reference is cited against the application or patent in making an obviousness argument, the
applicant/patent owner is not allowed to submit any comparison data (or any other data) between
the invention that is the subject of the patent and the compounds in the prior art reference in
order to rebut the obviousness argument. This means that unless the patent applicant provides
comparison data in the original patent application to essentially every single reasonably close
prior art compound (which in many cases is a practical impossibility), it is unlikely that the
patent will issue in South Korea or, if the patent issues, survive a post-grant validity attack.
Patent Linkage
Our members have reported problems with South Korea’s implementation of their patent linkage
obligations under their Free Trade Agreement with the United States. South Korea’s
interpretation of its obligations is quite narrow and leads to inequitable results. Moreover, the
Ministry of Food and Drug Safety (MFDS) may publish its own version of listed patent claims,
rather than the actual claims that the company submitted as part of the application process. The
MFDS does not provide applicants with a formal opportunity to comment on any changes to the
listed claims (although we understand they are informally notifying the company of any
changes). During appeals of these MFDS interpretations, extrinsic evidence is accepted only in
limited cases. In addition, the limited nine months stay against a generic filer is far from
automatic. MFDS can decline to impose a stay even if patents are duly listed in the Green Book.
These practices add uncertainty to IP protections for both innovators and generic manufacturers
and are inconsistent with Korea’s obligations under the FTA.
Thailand
BIO recognizes the Royal Thai Government’s efforts to create task forces dealing with IPR.
However, we remain concerned with policies relating to compulsory licensing of patents, as well
as the lack of significant progress relating to patentability of medical use claims and other
secondary inventions, regulatory data protection, and the need for a robust patent resolution
mechanism to prevent regulatory approval of generic versions of biopharmaceutical products that
are still covered by a valid patent. As such, we urge USTR and the U.S. interagency to continue
to engage relevant Thai authorities to address outstanding bilateral trade concerns affecting the
U.S. biopharmaceutical industry, including via the U.S.-Thailand Trade and Investment
Framework Agreement (TIFA), and to further strengthen the bilateral trade and economic
relationship between the two countries.
For 2019, BIO recommends Thailand be placed on the Priority Watch List.
Patentability
BIO recognizes the Thai government’s efforts to create task forces dealing with IPR and
appreciates this positive action. However, Thailand has undermined positive movement on IPR
45
with patent examination guidelines for pharmaceutical products that limit the patentability of
medical use claims and other secondary inventions similar to Argentina’s new guidelines.
With regard to protections for plant innovations, Thailand has taken steps to implement a plant
variety protection (PVP) system, but the level of protection is inconsistent with the International
Convention for the Protection of New Plant Varieties. Strengthening the level of protection for
new plant varieties is critical for many BIO members.
Compulsory Licenses
The Thai Government’s continued support of compulsory licensing of patented pharmaceutical
products as part of its trade policy also contradicts positive efforts and indicates a continued
disregard for intellectual property rights that are critical for the development of new medicines.
In particular, BIO’s members are concerned that this policy denies adequate and effective
protection of intellectual property rights for innovative biotechnology products. BIO is aware of
efforts by the Thai government to develop a biotechnology sector and appreciates its outreach to
the biotechnology industry. However, policies such as compulsory licensing will only serve to
drive biotech investment away from Thailand.
The Thai Government’s defense of compulsory licenses for drugs that treat non-communicable
diseases (such as cancer, stroke, or myocardial infarction) is of concern, given that many of
BIO’s members’ research and development efforts target such chronic diseases. These policies
go well beyond the letter and spirit of the Doha Declaration, which was meant to provide a
mechanism for governments to deal with public health crises and impact the ability of
biotechnology research and development efforts to recoup their massive investments. These
extraordinary compulsory licensing measures should not be used systematically to facilitate
budgetary planning. BIO continues to believe that the most effective global solutions will result
from policies that respect and encourage innovation.
Regulatory Data Protection
Thailand also fails to provide meaningful protection for the pharmaceutical test data required to
prove safety and efficacy of new drug products. The implementing regulations for the Trade
Secrets Act provide a five-year term of protection for “maintenance of the trade secrets” of
pharmaceutical test data. However, the regulations do not appear to provide the data protection
against “unfair commercial use” in a manner consistent with Thailand’s obligations under Article
39.3 of the TRIPS Agreement. This protection is critical to biopharmaceutical companies and
their ability to successfully launch a product in a particular market.
Patent Linkage
Thailand also does not provide a formal system to prevent regulatory approval of generic
versions of pharmaceuticals that are still covered by a valid patent. The lack of such a “patent
linkage” mechanism facilitates patent infringement in the Thai market, leading to potential loss
of exclusivity for patented inventions in the biopharmaceuticals area and increased enforcement
costs. This is particularly harmful in the biotech sector as biotech drug development can cost a
billion dollars or more and can take more than a decade. Without assurance of recoupment of
46
investment, and in these difficult economic times, biotechnology research and development will
diminish.
Our members report growth in availability of counterfeit pharmaceutical and other biotechnology
products in the Thai market. This trend is connected to a regional proliferation in the trade of
counterfeits, starting in Indonesia, Malaysia and the Philippines, but moving towards the territory
corridor of South East Asia. This raises a number of significant concerns and constitutes not
only a risk to the valuable intellectual property rights of BIO’s members, but a serious health risk
to the Thai public.
Pricing
Arbitrary and inconsistent pricing decision and discrimination of foreign companies in tenders
continue to hamper the investment climate in Thailand. Thai regulations require public hospitals
to purchase drugs and medical supplies from the state-owned Government Pharmaceutical
Organization (GPO), which utilizes a “Median Price or Maximum Procurement Price” (MPP)
system to set ceiling purchase prices for procurement. However, the arbitrary and inconsistent
calculation method utilized to determine the price ceilings not only create market distortions and
unfair price differentials that could adversely impact originators, but furthermore, such polices
have the potential to undermine patient access and the innovative environment in Thailand. The
U.S. biopharmaceutical industry has encouraged the Royal Thai Government to improve the
MPP mechanism in a manner that would reward innovative drugs and to enter into dialogue to
facilitate a resolution that would ensure transparency, predictability, and fairness in the market,
but, to date, there has been no meaningful opportunity for industry to participate or provide
input.
Turkey
BIO strongly supports the progress Turkey has made on improving the legal framework
particularly on the protection of intellectual property and on PIC/S membership. However, the
government’s continued delisting efforts to force local production of pharmaceuticals as well as
a host of additional issues are concerning and continue to weaken market conditions for BIO
members. BIO recommends that USTR place Turkey on the Priority Watch List.
Patentability
Industrial Property Law 6769 has been accepted by Turkish Parliament and was published in the
official gazette on January 10, 2017. The fourth section of the Law is dedicated to the protection
of the patent rights. The new Industrial Property Law is a significant step towards harmonizing
the national patent law with the provisions of the European Patent Convention (EPC). However,
certain areas, such as defining and ruling biotechnological inventions explicitly and
second/further medical use claims, are both not addressed by the law. As a member of the EPC,
Turkey should grant patents on such inventions. However, whether Turkey will enforce such
patents and protect them against third parties remains unclear.
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Compulsory Licenses
Another critical concern in the Industrial Property Law is related to its compulsory license
provisions. Article 130(2) of this law provides that “at the end of three years after publication of
a patent grant […] any interested party can request the issue of a compulsory license if at the date
of application [of the compulsory license] the following applies (i) The patented invention is not
being used or (ii) The level of current use does not satisfy domestic demand. The threshold for
assessing the use of an invention is not explicitly described. For instance, Article 132 of the IP
Law enables third parties to seek a compulsory license when relevant patents are used, but “the
use does not satisfy domestic market’s demand.” This provision is vague, subjective, creates
tremendous uncertainty for patent holders, and may be abused by competitor third parties. The
government refers to Article 5A paragraph 4 of the Paris Convention as a ground for this
provision. However, this paragraph in the Paris Convention does not refer to “satisfaction of
domestic market demand,” but to “insufficient use of the invention.” We believe “satisfaction of
national market demand” directly refers to a specific amount of provision of patented product to
the market and if this amount is not met, it will be possible to deem it as a ground for
compulsory license. On the other hand, the term of “insufficient use” does not refer to a pre-
determined specific amount.
Regulatory Data Protection
Data protection is undermined by regulatory delays in Turkey. Currently, regulatory approval
times exceed 850 days and will likely reach four years with the implementation of international
GMP standards in Turkey. The 6 years of guaranteed data protection is further undermined by
the fact that data protection begins when Marketing Authorization is first granted in any Customs
Union Member State, which includes the European Union. Thus, a large part of the 6 years have
lapsed before the drug is approved in Turkey. In addition, Turkish legislation indicates if a
product has a Turkish patent, the data exclusivity will end when the patent expires, even if this is
earlier than six years.
Non-Trade Barrier: Forced Localization
Another major non-trade barrier concerns “forced localization” practices in the pharmaceutical
sector. The Health Industry’s Localization Committee has taken a number of decisions on
‘localization’ pursuant to Action 46 of the 64th Government Action Plan-2016. This action is
part of the Structural Transformation of the Health Care Industry Program of the 10th
Development Plan (2014-2018) and it aims to “take new measures to promote local
pharmaceutical manufacturing and exporting of drugs which are compatible with international
regulatory standards”
The Turkish Medical Devices and Medicine Agency and Social Security Institution (TITCK) is
the lead on the localization decisions. In the first phase, imported products that have at least 3
locally manufactured equivalents with a +50% market share are due to be delisted in Q1 2018
unless they are locally produced. In the announced second phase, the threshold for market share
of locally manufactured equivalents is decreased to +10%, hence those imported products that
have at least 2 locally manufactured equivalents with a +10% market share are targeted to be
delisted if the companies selling them do not commit to produce these locally.
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Delisting of specified imported medicines from the reimbursement scheme on the grounds that
the importer company chooses not to produce it locally is discrimination against imported
products and considered a violation of international agreements to which Turkey is a party.
Market Access Barriers: GMP requirements, Pricing and Reimbursement
One of the issues in Turkey involves the requirement by the Ministry of Health to perform Good
Manufacturing Practices (GMP) inspection at every pharmaceutical production facility.
Although, TITCK allows parallel submission for prioritized applications, requirements still occur
for most of the products before the product registration application in Turkey, resulting in
significant registration delays for BIO companies. While the Ministry of Health does allow for
GMP certificates from other competent authorities, that acceptance is conditioned on other
countries recognizing Turkish GMP certification. Nonetheless, with Turkey’s recent accession to
PIC/S (Pharmaceutical Inspection Convention and Cooperation Scheme), which dictates
international GMP standards, Turkey should begin to recognize GMP certificates issued by any
of the current 52 PIC/S members. This positive development and further agreements with
countries are expected to overcome the GMP hurdle and improve regulatory timelines.
Although there have been significant improvements in the pricing environment, including
resolving the pricing freeze, regular price increases in line with changes in the foreign exchange
rate and no additional price cuts and discounts introduced since 2014, pricing still remains a
challenge for our members. Namely, the ongoing issue is around the reimbursement decision
criteria, which are not clearly defined, and involve a large amount of time to conclude the
process (on average 36 weeks).21 A newly implemented, yet poorly defined and nontransparent
alternative reimbursement process increases the uncertainty on top of existing challenges.
Orphan Drugs
Orphan drugs have not been thoroughly addressed by Turkish legislation. Collaborative studies
have been ongoing on draft “Orphan Drug Guideline.” Expediting the adoption and
implementation of an EU-compliant Orphan Drugs Regulation with the EU definition of rare
diseases would be of crucial importance to ensure Turkish citizens have faster access to new
medicines and Turkey to emerge as a globally-competitive economy in medical innovation.
WATCH LIST
Australia
BIO’s members continue to face unique IP challenges in Australia. BIO requests that the U.S.
Government monitor the situation and place Australia on the Watch List.
21 Association of Research Based Pharmaceutical Companies (AIFD) Market Access Survey, 2015
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Patent Damages Policies
Australia’s government is seeking significant litigation damages from companies that
legitimately seek to enforce their patent rights, putting Australia out of step with the rest of the
developed world regarding its treatment of intellectual property rights.
The government has intervened in at least seven patent infringement suits in Australia's Federal
Court, claiming damages from the innovator for alleged losses the government says it suffered as
a result of the delay of statutory price reductions under Australia's Pharmaceutical Benefits
Scheme (“PBS”). This derives from the delay in listing a generic drug on the PBS as a result of
the court granting the innovator a preliminary injunction to prevent infringement of its patent by
the generic drug, when the innovator was ultimately unsuccessful in that litigation. In the first
case where the government has intervened under this policy, the government is claiming more
than AUD 400 million in damages from the innovator.
The Australian government is, in effect, disregarding the critical and long-held distinction
between patent abuse cases and bona fide patent enforcement cases, that is, between cases where:
(1) an innovative biopharmaceutical company acts without good faith or vexatiously or
unreasonably by seeking to abuse its patent rights to prevent the entry of a generic onto the
market, on the one hand (“patent abuse cases”), and (2) the innovative biopharmaceutical
company acts in a bona fide and reasonable manner in seeking to act to enforce its patent to
prevent infringement, but ultimately loses the case, on the other (“bona fide patent cases”).
Moreover, the patent right that the innovator is seeking to enforce is one that is granted by the
Australian government and, it is the Australian government that defines the circumstances under
which price reductions under the PBS occur.
The Australian government's approach is inconsistent with the spirit and letter of Australia’s
international obligations relating to the protection of intellectual property rights. The Australian
regime does not meet these obligations because it deters bona fide and reasonable patent
enforcement by innovative biopharmaceutical companies through the use of litigation to pursue
government compensation claims or via threats to do the same. This approach is a major and
inappropriate shift in policy and practice by the Australian government.
Innovative biopharmaceutical companies should be able to commence bona fide patent cases
under the system set up by the government, in order to enforce patents examined and granted by
the government – including seeking preliminary injunctions – without the government later
seeking damages from the innovator in the event that the bona fide patent case is ultimately
unsuccessful.
Weakening of IP Rights
In 2016, the Australian Productivity Commission issued a report on Australia's IP arrangements,
making a number of recommendations which, if implemented, would have the practical effect of
weakening IP rights in Australia and which would lead to the deterioration of the innovative
climate in Australia. In 2017, the government launched a series of consultations seeking
feedback on certain recommendations. In November 2018, the Australian government published
its response to the consultation on inventive step, objects clause and crown use.
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More generally, the frequent reviews and inquiries initiated by the Australian government on IP
issues over the past decade or so have created an uncertain and unstable policy environment,
making it difficult for BIO's members to operate in an environment of legal certainty.
Lack of Regulatory Data Protection
Australia does not provide any regulatory data protection (RDP) relating to the registration
of new formulations, combinations, indications, populations or dosage forms of currently
registered therapeutic goods. Indeed, the absence of any such protection is in direct
contravention of Australia's obligations under art 17.10(2) of the U.S. – Australia Free Trade
Agreement (AUSFTA), which mandates that the Parties provide at least three years of RDP
protection from the date of marketing approval in circumstances where new clinical
information must be submitted to obtain regulatory approval of the relevant new therapeutic
good (other than information relating to bioequivalence).
Egypt
During 2018, BIO continued regular outreach to Egyptian officials, and notes the willingness of
government representatives to engage on policy issues affecting patients, the healthcare system
and the innovative life sciences and biopharmaceutical sector in Egypt. In recent years, Egypt
has taken some steps to enhance the environment for life science/biopharmaceutical companies
in particular. These steps include suspension of onerous pricing regulations, and reforms that
have accelerated new medicines reviews and decreased regulatory delays that inhibit patient
access to promising new medicines. There have also been instances of cooperation to prevent
patent infringement, and both the quality and frequency of consultation between industry
representatives and policy-makers/officials have greatly improved. There has been progress in
border enforcement and biosimilars regulation. Furthermore, BIO acknowledges recent progress
in dialogue with the government to address the gaps in Decree 499 and to find a path forward for
the pricing of new innovative products.
The challenge remains however that despite public statements of support for the sector and these
positive signals and some tangible progress, the government has continued to struggle to advance
policies into implementation and enforcement. Critical issues, such as patentability of certain
biotechnology innovations, patent linkage and regulatory data protection, have not been
resolved. In addition, BIO members have faced pricing challenges due to the devaluation of the
Egyptian Pound. Thus, BIO recommends the placement of Egypt on the Watch List.
Patentability
The Egyptian patent law prohibits patent protection for many valuable biotechnology
innovations. Inventions that strike at the core of the life sciences sector--in the subject matter
areas of organs, tissues, viable cells, natural biologic substances, and genome-- are expressly
excluded from patentability.
These are areas of subject matter that must be extended protection according to the obligations
contained in the TRIPS Agreement, provided the material in question is new, involves an
inventive step and is industrially applicable. While TRIPS Article 27.3 does recognize some
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permissible areas of exclusion from patentability, these provisions of the Egyptian patent law do
not fall within the permissible exclusions.
In addition, Egypt precludes the patenting of genetically-engineered plants and animals. In sum,
the Egyptian law precludes patenting of a wide range of basic commercial products and
processes in the biotechnology industry, discouraging both indigenous and international
investment in a sector where Egypt is well-positioned to compete and succeed.
Patent Linkage, Regulatory Data Protection
Egypt also does not provide patent linkage or regulatory data protection, and despite progress in
2017, the approval of new medicines continues in a not fully reformed, overly opaque system. At
least one BIO member reported that this negative IP environment has deterred further investment
and hiring additional employees in Egypt. BIO urges Egypt to adopt an effective patent linkage
system and to extend Regulatory Data Protection for at least 5 years.
Market Access Barriers
Following the liberalization of the foreign exchange rate in November 2016 and the subsequent
devaluation of the Egyptian Pound, BIO members suffered tremendous financial losses in Egypt
as prices of medicines are fixed. While the Egyptian government granted and implemented price
adjustments in January 2017, the second phase of price adjustments promised by the Egyptian
government for August 2017 have yet to be implemented. Such financial burdens have made it
difficult for BIO members to operate in the Egyptian market.
Due to these concerns, BIO requests that USTR continue to engage its Egyptian counterparts to
make improvements to patent protection in Egypt and to provide for the eventual adoption of a
fully TRIPS-compliant regime in that country.
European Union
BIO members’ concerns with the ongoing Incentives Review process aimed at weakening
Supplementary Protection Certificates (SPC) have been heightened in light of recent
developments. As such, BIO recommends USTR place the European Union on the Watch List.
While BIO is encouraged at prospects of US-EU FTA as an opportunity to address IP and market
access concerns, the proposed erosion of key IP rights in Europe, which up to now has been an
innovation leader with a strong IP system, raises significant concern.
SPC rights compensate innovators for lost standard patent term that results from costly and
lengthy development and regulatory approval timelines. As stated in the SPC Regulation,
“[m]edicinal products, especially those that are the result of long, costly research will not
continue to be developed in the Community and in Europe unless they are covered by favorable
rules that provide for sufficient protection to encourage such research.”22
22 Council (EC) Regulation No. 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the
supplementary protection certificate for medicinal products; see also Council Regulation (EEC) No. 1768/92 of 18 June 1992
concerning the creation of a supplementary protection certificate for medicinal products (no longer in force).
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SPCs currently provide right-holders the exclusive right to manufacture their approved products,
including for purposes of exportation. Being the sole producer and exporter of an IP protected
product from the EU market is one of the significant commercial activities through which patent
owners derive economic value from their inventions. This exclusive right helps to promote
investment in the research, development and production of new medicines in Europe for
domestic consumption and for sale abroad.23 The innovation-enhancing incentives of SPCs
would be significantly eroded if the EU export market for high-value innovative therapeutic
products were to be systematically distorted in favor of IP-infringing copycat products.
The proposed SPC manufacturing waiver is premised on contentions that it would “create
thousands of high-tech jobs in the EU and many new companies.” Belief that benefits will flow
from eroding SPC rights is based on an academic study by Vicente and Simões, published in the
Journal of Generic Medicines in 2014.24 In the article, the writers argue that adopting a
manufacturing waiver provision would result in substantial economic gains in the EU.25
The magnitude of those estimated benefits and the likelihood they will materialize has been
rebutted in publications that the Commission should consider.26 In addition, the benefits, if any,
are likely to be temporary and disproportionately affect the innovative biotechnology sector, as
they will result in part from exploitation of a transient technological advantage enjoyed by
European biosimilar producers. That advantage might for a short time allow EU biosimilar
makers to capture market share from EU biologics innovators during the SPC term. But as the
required technological capabilities spread globally to manufacturers in lower-cost regions the
advantage held by EU biosimilar manufacturers will erode. Furthermore, the current fragmented,
country-based EU enforcement regime, together with borderless nature of the EU’s Single
Market, would make it impossible to stop the entry onto the EU market of products made in the
EU subject to the manufacturing waiver. This would make the SPC regime effectively pointless.
Structural changes to the EU’s rights-based regime should not be made to exploit a potential
short-term advantage at the risk of longer-term economic gains. Apart from the questionable and
time-limited benefits postulated to flow from adopting the proposed manufacturing waiver, the
Commission should weigh the costs in possible job loss and economic harm in the EU to the
innovative biopharmaceutical sector that are predicted to result from this change. According to a
recent study, implementation of an EU-wide SPC manufacturing exemption could potentially
result in annual losses ranging between USD 1.34 billion to USD 2.27 billion to the European
innovative biopharmaceutical industry. These losses translate to estimated direct job loss of
23 European Union R&D Scoreboard, The 2016 EU Industrial R&D Investment Scoreboard, EUROPEAN COMMISSION (2016),
httpe://iri.jrc.ec.europa.edu/. 24 Vicente, V. and Simoes, S. (2014). “Manufacturing and export provisions: Impact on the competitiveness of European
pharmaceutical manufacturers and on the creation of jobsin Europe”, Journal of Generic Medicines, Vol. 11, Issue 1–2, 21
pp.35–47. 25 Id. at 35. 26 Sussell, J. A. et al. (2017). “Reconsidering the economic impact of the EU manufacturing and export provisions”, Journal of
Generic Medicines, Vol. 13, Issue 2, pp. 73–89.
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between 4,500-7,700 (with an additional 19,000-32,000 indirect job losses) and a decrease of
between EUR 215 million to EUR 364 million in R&D investment.27
These losses would be exacerbated if the intended scope of the proposed waiver is expanded.
BIO members are cautious about the recent proposed mandate from the European Parliament28
that not only endorses the ill-conceived waiver for export proposal (albeit with some critical
safeguards), but also would include expanding the proposal to include stockpiling for the
European market as well. This would be a significant departure from the existing proposal and
greatly exacerbate the concerns, including potential threat to American innovative companies
doing business in Europe, undermining the innovation ecosystem in Europe, and potential loss of
jobs in the innovative sector. The European Union itself criticized similar practices in Canada
when it brought (and won) a WTO dispute challenging similar stockpiling provisions during the
20-year term.29 Similarly, such a proposal would represent an expropriation of valuable patent
term in a manner inconsistent with global norms.
The current EU intellectual property rights-based incentives framework, including SPCs, has
fostered a robust ecosystem of innovation and generic competition within Europe. It protects
and encourages the substantial investments made by the EU and others in this transformative
technology. Adopting the proposal for a manufacturing waiver during the SPC term would
undermine the rights-based framework that has and is making new healthcare solutions available.
The EU should not alter its IP framework to facilitate exploitation of short-term technological
advantage. Consistent with the introduction of IP changes in other contexts, a prospective
approach to application would create the least negative impact.
Mexico
BIO recommends that Mexico be placed on the Watch List due to continued difficulty in
protecting and enforcing intellectual property rights.
Notwithstanding, BIO would like to reiterate its support of the USMCA and appreciates the
Administration’s efforts to prioritize biotechnology innovation, including provisions that update
intellectual property protections and agricultural market access to 21st century standards. Strong
and dependable intellectual property standards are critical to fueling innovation, attracting
investment, and ensuring that patients, farmers, and consumers around the globe have access to
the next generation of biotechnology breakthroughs. The USMCA represents an important step
in bringing Mexico and Canada closer to high U.S. standards that have made us the world leader
in biotechnology innovation. BIO is hopeful that in this context noticeable improvements will be
made in the IP environment in Mexico.
27 Pugatch, “Unintended Consequences” 2017 at 3, accessed at: http://www.pugatch-
consilium.com/reports/Unintended_Consequences_October_%202017.pdf. 28 Council of the European Union, Interinstitutional File 2018/0161(COD), accessed at:
https://www.consilium.europa.eu/register/en/content/out?&typ=ENTRY&i=ADV&DOC_ID=ST-5411-2019-INIT 29 Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R, adopted 7 April 2000, DSR 2000:V, p.
2289
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Regulatory Data Protection
Mexico continues to inadequately implement its obligations relating to test data required by
regulatory agencies to obtain marketing approval for pharmaceuticals. Mexico has obligations
under TRIPS Article 39.3 to provide protection for pharmaceutical test data against “unfair
commercial use,” and under the North American Free Trade Agreement (NAFTA) Article 1711
section 6 to provide at least a five-year protection period after marketing approval against
reliance by subsequent applicants on the data supplied by the originator. Nevertheless, Mexico
still does not provide protection consistent with these obligations. The Industrial Property Law
states that Mexican law will implement requirements under its various international obligations.
However, we are not aware of any implementing regulations or practices that provide for a five-
year term of non-reliance consistent with Mexico’s international obligations.
Officials in the Mexican government have stated that they do not intend to extend data protection
to biological medicines. Such actions are contrary to Mexico’s obligations under NAFTA and
TRIPS. Again, BIO appreciates the Administration’s efforts to improve IP protections through
the USMCA.
Patent Infringement Adjudication
In addition, extensive periods of time pass before patent infringement cases are decided.
Companies report that IP enforcement cases proceed in two stages before the Mexican Patent
Office that can last 4-5 years. Two additional appeal stages then follow before a final decision is
made in the case. This problem is particularly acute as the possibility to recover damages is
delayed until after all appeals are exhausted.
Even then, innovators are not allowed to receive damages in court and must initiate a second
proceeding before a civil court to receive a damage award. While some may argue that
injunctions prevent this problem, the infringer can post bond without providing evidence of non-
infringement and have the injunction lifted and allow the infringing products to remain on the
market. This causes extensive delay that can last up to 10-12 years between initiation of
proceedings and recovery of damages. This process is extremely costly and inequitable to the
innovator.
Patent Linkage
Linkage between the regulatory agency and the patent office only covers patents with a
pharmaceutical active ingredient per se. Several court decisions have ordered the publication of
formulation and use patents to satisfy linkage requirements but the patent office refuses to
publish these patents without litigation and the regulatory agency has shown reluctance to
observe these patents. Normally, patents are only included in the linkage gazette when the
patentee requests it. The linkage system provides a process in which COFEPRIS (Mexican
Sanitary Regulatory Agency) consults the Mexican Patent Office on whether a specific generic
infringes on an existing patent.
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United Arab Emirates
The United Arab Emirates (UAE) has made great progress in recent years to provide an
increasingly competitive environment for investment in the biotechnology sector, exemplified by
a growing local innovative industry. Nevertheless, an issue of growing concern has emerged in
this otherwise promising country related to the protection of patents of innovative pharmaceutical
products based on the country of origin and the reciprocal patent recognition within the Gulf
Cooperation Council (GCC). BIO and its member companies are encouraged by a recent series of
IP workshops held in the UAE in an attempt ot resolve the issues, but as of this date the UAE has
not confirmed a concrete resolution of the challenges outlined below that would reassure investors
and companies operating in the innovative biopharmaceutical sector.
For these reasons, BIO recommends placing the UAE on the Watch List.
GCC Patent Recognition
While the UAE is required to recognize GCC patents as of the date they are filed, BIO member
companies are concerned by recent generic approvals in the UAE for patented products within
their GCC patent term. BIO requests written affirmation from the Ministry of Health and Ministry
of Economy that GCC patented products will be granted protection in the UAE.
Protection of Biopharmaceutical Patents Based on Country of Origin
The UAE made tremendous gains in IP since the issuance of Decree No. 404 on 30 April, 2000.
However, a recent issue seeks to reverse some of the developments from Decree No. 404. BIO
interprets Decree 404 as to provide marketing exclusivity to innovative products based on the
protection of regulatory data in the country of origin up until the expiration of the patent in the
country of origin. We appreciate that the UAE government itself in a letter to the US Embassy
in 2002 specifically said that Decree 404 provided IP rights through the end of a product’s COO
patent.
Nonetheless, in 2017, the UAE registered two generics of an innovative pharmaceutical product
still under patent protection in the UAE. In the case of BIO’s member company, the clear
violation of Decree 404 is a worrisome precedent which creates uncertainty for the products of
our member companies.
United Kingdom
BIO recommends placing the United Kingdom on the Watch List given unresolved market access
and pricing concerns for biotherapeutics and concerns over IP rights in the context of the UK’s
exit from the European Union. BIO would encourage the U.S. Government to continue to support
implementation of policies by the UK Government that support biopharmaceutical innovation and
market access. BIO and its members will continue to support the UK Government on developing
a policy environment supportive of the development of a robust life sciences sector.
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IP Protection and Brexit
Maintaining as much predictability and stability in the IP system during the uncertainty of Brexit
is of significant import to BIO membership. As the UK prepares to exit the European Union (EU),
BIO members expect continuity of IP rights obtained in the UK under EU law and that the UK
Government take measures to bring their IP framework, which is already one of the strongest in
the world, further in line with global practices and those of their European neighbors. One scenario
that presents concern to BIO members is in the event of a hard Brexit, i.e. one without a withdrawal
agreement, and the implications this may have on determining the start of data or market
exclusivity for biotherapeutics from date of authorization in the EU or UK, whichever is earlier.
The biopharmaceutical sector believes that in such a scenario regulatory data protection should
run from the date of UK marketing authorization. Similarly, Supplementary Protection Certificates
(SPCs), which convey the identical rights as those conveyed in the underlying patent, should run
from the date of UK marketing authorization.
Moreover, the UK should address those aspects of the current UK IP framework that are out of
step with global practices to ensure a thriving life science industry post-Brexit. For example,
ensuring that court or other determinations concerning inventiveness or novelty are based on
specific language claimed by a patent conferring rights in the UK is important to provide
confidence that IP rights can be appropriately enforced.
Market Access
Patient access to novel biotherapeutics continue to present challenges to the innovative
biopharmaceutical sector. National Health Technology Assessment (HTA) processes as well as
sub-national assessments aim to contain costs but creates an environment where UK patients are
less likely to have access to innovative drugs than patients living in other countries. The UK’s
National Institute for Health and Care Excellence (NICE) has a high rate of rejections based on
rigid and outdated cost effectiveness measures.
Current negotiations between the UK government and the Association of the British
Pharmaceutical Industry (ABPI) to renew the Pharmaceutical Price Regulation Scheme (PPRS) is
something that BIO’s broader membership, that are not represented by ABPI, will continue to
monitor to ensure that pricing policy solutions are balanced with on-going initiatives to help
support innovation in the global life sciences sector.
CONCLUSION
BIO appreciates the opportunity to comment on the intellectual property rights issues affecting
U.S. biotechnology companies abroad. We hope that our submission helps the efforts of the U.S.
Government in monitoring intellectual property rights internationally.